TechnipFMC Aktie

All right. Nice crowd. Welcome to day 2 of our 11th Annual Energy Conference at JPMorgan. Delighted to have TechnipFMC, Doug Pferdehirt, who's the CEO, to present. I think we were discussing last night, FMC has been at all 11 of our conferences. So thank you for your continued support of the conference.

Well, thank you, Arun. Thank you to JPMorgan for having us, and thank you to everybody in the room and those that are attending via the webcast.

Yes. Doug, before we begin, I was wondering if you could just give the generalists in the audience today, just a quick snapshot of the company and what you do within the energy services landscape.

I'll do my best, Arun. It's hard to do it. And in short -- if you really look at the history, I think it'd make a great Netflix miniseries one day. But in the shortest way possible we brought certainty back into offshore projects, which is giving our clients greater and greater confidence in moving forward in FID-ing investments in the offshore.

We're doing this in a period coupled with new technology that we're bringing as well as a new commercial model that we're bringing into the market, which is allowing us to drive down the breakevens offshore while breakevens are increasing in other areas where our clients could be making an investment.

As a result of this, we see ever-increasing capital flows moving into the offshore domain, which is growing the market at a time that's very favorable to TechnipFMC given the uniqueness of our offering and the changes in the competitive landscape that are very favorable to our company.

Great. Doug, you mentioned a little bit about offshore being a bright spot within the global spending picture. We're seeing a lot of deepwater FID activity across the U.S. Gulf, Brazil, West Africa. How would you characterize the current offshore spending environment as we move through the year? And what is the setup as you think about the back half of the decade?

Sure. So look, the market has been growing for some period of time. If you just look at it over the last 2 years, we publish on a quarterly basis, the outlook for the offshore subsea developments those projects that are likely FID within the next 24 months. So it's a 2-year look ahead. That data set has grown 30% over the last 2 years. As we sit here today, we're actually seeing a further inflection in the growth rate 2027, beyond -- through and beyond the end of the decade. So I would call it robust today but growing.

Great. And could you highlight what you're seeing in some of the emerging basins beyond, call it, the Golden Triangle, places like Guyana, Suriname, Namibia, Mozambique, and trying to paint the picture of the deepwater market, not just kind of concentrated in the Golden Triangle.

Sure. And it's an important question because earlier, you were asking about growth through the end of the decade. All the growth that I've referenced thus far is really coming from the Golden Triangle or the traditional offshore oil and gas basins around the world. So it really hasn't been supported by the growth of some of those emerging basins on top of that. So as we look forward through the end of the decade and beyond, is really where we start to see the contribution in a meaningful way from some of those emerging markets as well.

Keep in mind, we have seen progress in Suriname where Total Energy did sanction the first project there, GranMorgu, which we are performing for them under our iEPCI model with Subsea 2.0. So we're very excited about that. We do -- we are tendering in Namibia today. So we do anticipate the potential for an FID this year, certainly next year, if not this year.

Guyana, I still think, as an emerging basin and even though what ExxonMobil there has done is exemplary. It's never been done before in a very short period of time in 1 decade, they took a country that was not producing to over 1 million barrels a day now on the pathway to 2 million barrels a day. It's just been astonishing. We're honored to be ExxonMobil's exclusive partner, and we performed all of the work for them in Guyana.

So Mozambique, we're performing projects there for both ENI as well as for TotalEnergies. Mozambique is very interesting being it's a gas market and the access to the Asia Pacific market for the gas. So the emerging markets are contributing, but they'll contribute an even greater portion as we move towards the end of the decade. And there's a few we didn't even talk about beyond that list, and I think we'll start to hear about in 2030 and beyond.

Yes, maybe Indonesia is a place that we've been hearing some things about, correct?

Indonesia has been quite active. There will be other activity, I believe, in East Africa. There will be other activity in Asia, and there will be other activity in South America that we haven't even talked about.

Doug, we had one of the biggest supply shocks since the 1970s. You liaise with a lot of your customers, a lot of NOCs, a lot of large majors, independents, what has been the reaction from your customers? And how does this -- how do you think this influence deepwater activity?

So before the war, there was already this shift, as I referenced in my opening remarks, the shift was already underway. Certainly, as a result of this, there are several different dynamics at play here, the buyers or the consumer. So let's just be specific and say maybe the Asian countries, they themselves are looking for alternative supplies. When they're looking for alternative supplies to maybe not be so leveraged on any 1 particular region, they're typically going to other producing countries, most of which are producing from offshore.

So clearly, when we speak to our clients, they're getting interest in contracts now from buyers, other countries for their commodity. So they're looking at potentially increasing their capital expenditures in their offshore projects to be able to feed that -- I'm going to call it an increased demand. It doesn't mean that the global demand is being increased. It means that the selection of that it's really diversifying their supply into other regions, which will largely be driven by offshore.

The other thing that we're seeing is individual countries themselves, looking at their own oil and gas reserves. And what could they do to strengthen their independence, maybe not to be truly energy independent, but to be able to at least have a greater local supply within their own control. So when you speak of Indonesia earlier, clearly, we're seeing an increased demand in the country like Indonesia. So there's a few different dynamics at play.

And then I would say just for our global customers, they're looking at their portfolios and they're looking at kind of risk tolerance for different regions for different activities. And perhaps that could also result in them diversifying some of their spend from one region to multiple regions as a result of what we've all just experienced.

Let's talk a little bit about Azul and on the company, the inbound order trends, FTI has consistently been delivering call it, $10 billion per annum of inbound Subsea orders. You mentioned that your Subsea opportunity list is up 30% or last couple of years or so. And perhaps there may be an inflection point in orders as we think about 2027. Could you maybe elaborate on what you're seeing on the inbound order front?

Well, you back me into the corner, Arun. I have no choice but to confirm that we would also expect to see an inflection in our order rate in 2027. Clearly, just given the strength of the market, the increasing size of the market, our position within the market, our unique offering and our forward visibility that is quite unique with our customers.

Keep in mind, we are also the offshore architects. So we start at the architectural phase, then we go through the manufacturing, the delivery, the installation, the commissioning. And then we have a long life of field services contract, typically 20 to 30 years, OEM-type model, associated with the services over the life of field of that project. So if you add all that up, we're typically involved in the project for 30 to 40 years from inception all the way through the finalization of the economic production from that reservoir.

So because of that, we have a seat at the table very, very early, and it gives us a great degree of visibility into likely FIDs and decisions that are being made. Because of the uniqueness of the offering which we call iEPCI or an integrated project, where we do everything from, again, architect to life of field services.

Our ability to be able to do that also leads to a lot of direct awards, meaning awards that never go out to a competitive tender. That is a unique visibility that we have into the market and a high degree of certainty because we're working together with the clients to make those projects economical.

So when you add all of that up and that visibility that direct awards and the unique positioning that we have along with the growth of the market and an ever-increasing competitive landscape, it puts us in a position where we can say with confidence that we expect an inflection in our inbound order rate in 2027, above the $10 billion run rate that we have reconfirmed for this year.

Doug, you mentioned something last night that I found interesting is that when you became CEO, you felt as though your biggest competitor was U.S. shale in terms of the cost curve. And can you talk about how Subsea projects were done 10 years ago versus the industrialization you've pushed into the segment and talk a little bit about your Subsea 2.0 offering.

Sure. Often, we get I'm very competitive. Our company is very competitive. And often you get focused on another company, and you lose sight of what's really meaningful. What's really meaningful is the capital flows and the confidence in the offshore market. And we had lost that over a decade ago, the performance of our company as well as all the other companies in the sectors was poor if we're just being very blunt and very honest.

Poor, meaning we typically delivered projects 1 year late. Not 1 day, not 1 month, not 1 quarter, 1 year late, which would destroy the project economics for our customers. This was offset by a very high commodity price, but it also meant that the breakevens offshore were approaching $80 a barrel. $80 a barrel. At that point in time, Arun, we reflected within our company and realized that this was not a sustainable path. An ever increasing commodity price is not a good strategy for our company. So we decided we need to focus on what really was wrong with the industry, what we could humbly do to try to influence a different outcome and build a very different company as a result of that.

So that started on the innovation side, where we looked at the way that we were delivering projects over a decade ago. And our customers were telling us what to build, exactly what to build. So they were giving us specifications that were unique on every single project. So we never had a repeat order even from the same client. So from client Project A to their same client project B, they would have a completely different set of specifications. This led to -- or this leads to a very inefficient process and a very fragmented supply chain. These things would ultimately end up in waste, rework, cost overruns, delays on projects and would affect the overall project economics. So at that point, we sat back and we said, "how could we do this differently?" And we didn't come up with it on our own. We just looked at other industries.

And the industry that you would think is far away from what we do for a living, but we were quite enamored by the way that they were working their process was the automotive industry. So we started working closely with Toyota in the Lean Institute and started to try to figure out how did they take a process that was engineered to order or the specifications were unique and differentiated to something that was incredibly efficient. And the answer was we needed to move from an ETO world, engineered to order to a CTO world, configured to order.

So today, when you go on and you order your automobile from whomever you prefer, you don't get to tell them how to make the engine. You don't get to tell them what alloy to use in the frame. This is what our customers were doing. It wasn't adding any value, but this is how they were approaching the market. And we were -- it was the way the industry operated. It wasn't our client's fault. We enabled this. So what the automotive industry does now is you have a set of drop-down menus. In the end, they deliver you an automobile. It feels like they made that automobile just for you. In reality, they've made 1,000 or 10,000 of that configuration. But more importantly, when you hit order, they don't have to do any engineering. There's no first article. It goes straight into assembly and test.

So if you put that into the context of our business, where we have come up with what we call Subsea 2.0 which is this configurable architecture on the seabed, our customers now work from an iPad. They work from an app. Within the app, there's a set of drop-down menus. Instead of saying 2 doors or 4 doors or automatic or manual transmission, it says 5,000, 10,000, 15,000 or 20,000 psi, 250, 300, 350 or 400 degrees fahrenheit. But it puts those functional requirements that they need, which then go into a configurator and outcomes, the type of equipment that they need.

At the moment they order that equipment, it goes straight into our assembly and test, which reduces 9 to 12 months of detailed engineering because if you change 1 spec, if you just want to change 1 thing by -- phase it by 12 degrees different than the last piece of equipment, it's 9 to 12 months of engineering because you have to go back through every single line item before you can start the machining or the manufacturing of the equipment. So this has really allowed us to shrink the cycle time which is critically important to improving the offshore project economics and bringing greater certainty to the outcome.

So that's really what Subsea 2.0 is all about. It's been hugely successful. The market has embraced Subsea 2.0 in a meaningful way, and it continues to provide great value to our customers through reduction of cycle time and great value through us through greater efficiencies within our organization.

Doug, can you talk a little bit about -- so that's the subsea or the equipment piece, what are you doing in terms of providing solutions when you give an integrated project or your iEPCI kind of framework?

Yes. Thank you for asking. So first, we needed to address the architecture, which was Subsea 2.0. After we did that, we sat back and we said, is this enough? And it was meaningful, and it was certainly going to improve the economics. But what we realized was at the time customers would have somebody build the equipment and somebody do the installation and the connection of the equipment.

So the equipment sits on the seabed. It's typically -- it could go back to shore, but it's typically connected up to something that's floating on the top of the water, most likely -- or most of the time, it's called an FPSO. But it's something that is floating on the top of the water. But everything on the seabed needs to be connected back up to that object through the water column, which, keep in mind, could be hundreds of feet to 2 miles deep in the water column. We work really, really deep on the bottom of the ocean. So that has to be connected with pipes for the fluid to flow through. It has to be provided electricity through cables. It has to have telemetry through fiber optics, down lines or chemical injection lines. It's a very complicated system to support that equipment on the seabed.

Remember how deep we are on the seabed. This is all with advanced electronics. This is designed for a 20 to 30 year life. So you're putting high-end automation and control and robotics on the sea floor in a saline environment, to work for 20 to 30 years. This is really high-end automation and control technology that we have within -- and competency that we have within our company. So when we did -- when we looked at it, we realized that if we brought those 2 together, -- and our customers no longer bid those as separate work packages, there were things we could do to integrate those connections -- again, fiber optics, power cables, chemical downlines, flow lines to connect to that equipment back up to the surface as well as the way that we would install all of that onto the seabed and into the water column.

That led to the concept of the iEPCI or the integrated offering that led to the merger of FMC Technologies with Technip creating TechnipFMC to remove the redundancy to remove those unnecessary interfaces. On an average project, if you do it in an integrated way, you will remove 30% of the hardware required by removing unnecessary interfaces. We don't have time to get into all that, but it's a meaningful number.

We're putting massive amounts of equipment on the seabed to be able to remove 30% of that, and to be able to do that in a much more efficient way is why our customers are also embracing the iEPCI. So if you put the combination of the integrated offering, which is unique to our company, with the architecture, the Subsea 2.0, which is unique to our company, it's why we've had the tremendous success and customer acceptance that we've had in the market.

And how do you quantify that? 80%, 8-0, 80% of our business is direct awarded to our company. It never goes out to a competitive tender because our customers see the value, and we are in a situation where our customers win while we can win. We're not in the typical relationship where there's a winner and a loser, either the customer or the supplier based on supply and demand. We have a very different way that we treat our customers. We ensure that our customers are winning every day, and that's through the relentless pursuit of reduction of cycle time.

Every hour, every day, every month that we save on cycle time and accelerate time to first oil, dramatically improves their offshore project returns. And we deliver these projects with 100% certainty, 100% certainty on time, on budget every time. Meanwhile, we're able to benefit because, again, we're getting those greater internal efficiencies. We're reducing that 9 to 12 months of required engineering and we're able to drive much greater operating performance within our company.

In a typical Subsea 2.0 versus a typical 1.0, we can move 2 to 2.5x the volume through the same roof line in a 2.0 world than in a 1.0 world. We're not stopping and starting, building something for the first time. We really now have achieved flow. We're not done because I know that sounds like we've accomplished a lot, and perhaps we're at the end of the story. It's important to recognize we're not done. What we have done so far is only about 1/3 of the overall equipment and the overall installation activity that we do as a combined IECI project.

So think about everything we've just said and the benefits that we've received from that differentiation, we're only 1/3 of the way done. We have 2/3 left to do, which we're actively working on today to get an overall system that will be even shorter cycle time than what we can do today.

Yes. Could you maybe elaborate? Because we've highlighted as the next big catalyst for the stock is the industrialization of, call it, the installation process. We've -- I think the market is calling it SURF 2.0 and maybe give us a sense and maybe give some breadcrumbs on how that process is going?

Sure. So this nomenclature SURF, which is subsea Umbilical Risers and Flowlines, it's kind of old nomenclature the way the industry used to look at the equipment on the sea floor was considered SPS, subsea production systems. The water column and the installation, or the vessels, was considered SURF or Subsea Umbilical Risers and Flowlines. We destroyed that by putting it together and calling it iEPCI, right? But it's fair that the industry still sometimes thinks about SPS and SURF.

Everything that I talked about in terms of the Subsea 2.0, the industrialization or the configure to order the automotive model, we've only applied to the seafloor so far. So as part of the merger, we got the capability of the water column umbilical riser flow lines, flexible pipe as well as the installation capability. That's what we're working on now. That's the remaining 2/3.

We have done -- we have made tremendous progress going through a very disciplined approach, learning from how we performed on the Subsea 2.0 seafloor to look at the rest of this 2/3 and what we can do differently. I will tell you, it is dramatic. It will be game changing, not only for ourselves but for the industry. But I'm going to stop there. Arun, I'd like to go further, but we are deep, deep, deep into the concept select. We are deep into really proving out some of these concepts and the impact that some of these concepts will have I will personally though, I will tell you, I am extremely motivated and extremely excited and believe the impact of what we have left to do will be greater than what we've done so far.

More importantly, our customers believe that, and our customers want that. And that's what's going to continue to drive down the breakeven in the offshore, continue to make it more and more attractive and continue to drive more capital flows offshore.

Great. We have ExxonMobil, who's going to follow you. So that's a big customer as well.

A customer, we're honored to be partner with.

Great. Let's shift a little bit to financials a little bit. You've guided to $9.4 billion of Subsea revenue, 21.5% EBITDA margins, not going to ask you about the quarter, but just generally how are things kind of progressing from an execution standpoint and your belief in terms of continuation of margin growth as the cycle continues?

So speaking of the -- so the Subsea guidance for 2026, as is being referenced by Arun, I'll just be brief. We're going to deliver. As we look forward beyond 2026, already back in February, February of 2026, we already made the statement. I'll reaffirm it today with an even greater level of confidence. We're going to deliver growth in inbound. We're going to deliver growth in revenue. We're going to -- and deliver growth in EBITDA in 2027. So we're a backlog company. We have great visibility. We have an ever-improving quality in our backlog. And I can say with a high degree of confidence, we will continue to grow into 2027 as well.

Great. Doug, one of the favorable things about the business model is you spit off a lot of free cash flow from the business. You have a net cash position at $540 million. Your EBITDA, the free cash flow conversion has been very, very strong, I think, 65% or so. How do you think about the right level of cash to manage your business. We're a bank. We don't want you to get too much cash to start competing with us, but how are you thinking about the right balance sheet leverage of the company? And maybe comment a little bit on your cash return framework.

Sure. And look, thank you for asking. It's starting to be somewhat taken for granted. But if you look at the work that we have done to improve the balance sheet and liquidity of the company, at the same time as all these other innovative things that we're talking about, mergers, et cetera, we're super proud of where we are. We are financially extremely strong. As you mentioned, we're in a net cash position. We don't have any debt really coming due until quite a few years out, and we have obviously the capacity to take that out. It's a small amount of debt. So in a very strong position.

We continue -- like everything we do at the company to look for ways to optimize the performance of the company. That includes cash generation, and that also includes the way that we use that cash. What's really important when you think about the cash generation of the company from everything that we just said, growing inbound, growing backlog, growing revenue, growing EBITDA margin and EBITDA is obviously going to generate more and more cash. The question is, are we going to be good stewards of that. And I hope we've demonstrated that. And I sit here today and can reconfirm that.

We are not a conglomerate. We are a pure play. We don't just buy things for the sake of size or bolt-on acquisitions. We are very focused in what we do. Our M&A landscape has no white space. We've done the big strategic moves that were required. We continue to invest in technology, particularly around material sciences and automation and control, and we will continue to do so. But nothing that is going to be a huge generator or a huge use of that cash. And internally, we're growing the company at a level of CapEx that only requires about 3.5% to 4.5% of revenue, and we're typically on the low end of that and growing the company.

How are we able to do that? We're able to do that through this drive this relentless pursuit of reduction of cycle time. We talk about how it helps our customers. That's most important to us. But it also helps us because if I take 9 to 12 months off of the engineering required on a project, I have 9 to 12 months more capacity in engineering to do other things. If I can do 2.5x through the throughput of my manufacturing facility, I don't have to spend any additional capital to grow the company to build more manufacturing.

And it's this way of thinking differently, which is not the way things have traditionally been done in our industry. Traditionally, if you were in growth mode, you spend capital, you spend, spend, spend, then you overspend, then maybe you don't have the level of activity and there goes your returns. We are a returns-focused company. We're very proud of what we've been able to do. Our ROIC is achieving levels that have not been achieved historically, and we have a pathway to continue to drive those even higher being very good stewards of the way that we use the cash within the company.

And finally, because I just -- the clock just hit 0, 0, 0. It's important to understand with the cash that goes beyond that, we are delighted to return to our shareholders and we have done that in a meaningful way. Over 70% of that free cash flow generated.

Great. Doug, we're out of time. Thank you so much.

Thank you. Thank you all.

So let's start. Good morning, everybody. Thank you very much for being here. So welcome at the SDC conference. I would like also to thank you very much, Doug for the heart, Chairman and CEO of TechnipFMC to be here. It is a great honor to have you on the scene, Doug. Thank you very much. And maybe on a more personal way, I would say it's also a big pleasure to have you. Doug and I have been knowing each other for now 11 years. So it come back to 2016, 2017, the Technip, FMC merger.

At that time, you were Chief Operating Officer of legacy FMC Technologies. And maybe at the time of the merger, where you're asking yourself like at some stage, charges the goal. how can I run a company in a country with as many as 246 different types of cheese. It's a good question. Years after years, there have been ups and downs. -- but the vision became reality, and TechnipFMC started to massively outperform the sector starting in H2 2022. So the -- I would say the skeleton of this discussion is going to be very simple. The past -- in fact, the past, it will be a little bit of a present the present and the future. Now let's start.

Also, 1 point, if you want to raise some questions, there is a crude and all the questions should pop up on my iPad. This is a theory, but my friend and colleague, Bob Racket told me that it is working. So I think it is the case. So Doug, thank you very much. So let's start by the past. And when I'm saying the past -- how do you view the current cycle compared to the previous ones in plural, how do you view it on Berry to the 2005 2013 cycle, what are the differences? Are there some common features what has most surprised due in this current up cycle.

Thank you. Thank you, Gil. Thanks to Bernstein for having Technip to be part of the conference. Thanks to the many familiar faces and some new faces in the audience here today. We appreciate you being here. And to those on the webcast, thank you for dialing in. So I got to go back to the Dogan quote. It's tough to follow a quote like that. I didn't know we were going to be talking about cheese. And I'm not sure that Dugald have been excited about the approach that we took. So we took the 250-odd different cheeses and made them into a single configure-to-order product line.

Our cheese manufacturing would have been very different in the end, and I'm not sure my French friends would have approved of it, but a very unique approach and somewhat of a fitting quote considering the challenge that we had at the time. So let's talk about that cycle. And you'll hear me say this a lot. We are in the midst of as a structural change -- and part of it being a cycle is becoming, I think, less and less obvious. And I think more people are beginning to really realize there is a structural change going on, a structural change, not just in power demand, but a structural will change, particularly in the offshore power generation.

And that's what is -- it's really starting with the offshore, which is where we're seeing the benefit of that. But if I compare the 2, honestly, they couldn't be more different. There's far more differences than similarities between the 2. And if I had to just pick a couple of examples, we could talk about the fact that in that cycle, '05 to '13, '14, companies like ourselves were winning and our clients were losing. That is not sustainable. That is what leads to a cyclical business.

So we made a decision that was not obvious at the time, which was we were going to create an environment to which we could win, whilst our customers could win simultaneously. Now when you go back to the last cycle, the challenge of doing that was item #2. The industry had a fixed asset mentality, a fixed asset mentality, which meant supply and demand, which meant cyclicality.

We induced the cyclicality because as thinking about our businesses as fixed asset businesses, we would raise prices, raise day rates, raise costs as a result of an improved environment, i.e., demand when demand outstrips supply, and we would "take advantage of that scenario. Well, I learned early on in my career, your customer is always smarter than you, and no customer is going to allow that to perpetuate very long.

So very quickly, they'll swing that around by reducing demand, which puts the pricing leverage back on their side of the table. So point number two, the structure of the business just was not able to deal with that. And then the third really fundamental change that's occurred between the last period of time. I'm going to -- I don't like the word cycle, obviously, the last period of time and now is the competitive landscape. It is completely different. We didn't exist, we did not exist in the last cycle. Now let me be clear, Technip as a stand-alone company existed, FMC Technologies as a stand-alone company existed, but Technip FMC did not exist. So think about that.

So those are some really major changes that truly differentiate what we're experiencing today from the past. The fourth and final aspect that was a major change was the attractiveness of the capital to flow to -- for our customers to flow their capital to different areas. And if I go back to that period of time, the challenge really wasn't the offshore environment.

It was the fact that the U.S. shale was attracting the capital because the U.S. shale was presumed to have better economics and certainly had better predictability. So in that past period, because of those kind of aspects that I just pointed out, offshore projects were high risk. Offshore projects had a lot of uncertainty. And because of that, when our customers had an opportunity to flow their capital investment to another what appeared to be more attractive investment for them, it flowed to the U.S. onshore.

So around that period of time, we had a bit of a breakthrough moment where we realized our competitor was not another public company or a private company. Our competitor was simply the access to capital. So we had to make offshore attractive again. We need to make offshore economic again, and we needed to make the offshore -- put the confidence back in by bringing the certainty of the outcome back into the offshore -- that led to several changes in the company, which we can get into, if we would like.

And -- well, first of all, the creation of TechnipFMC, the investment and changing the way of what we do and how we do it, which has allowed us now to be in a scenario where we attack cycle time every single day. We call it the relentless pursuit of cycle time. So we have taken the offshore economics and improve them substantially by reducing cycle time. We have brought certainty back into the offshore projects, meaning it's delivering them on time, on budget. So now the economics offshore have improved dramatically, while the economics in the U.S. unconventionals continue to be quite challenged.

And as a result of that, the capital flowing to the offshore, we're benefiting from that differentially because of what we have created is unique in a very different competitive landscape than we had during that last period. So that's just a little bit of the overarching story behind it, and then we can get into the elements, if you would like.

So globally, maybe to put further color to what you just said. Let's go back to June 2014 just before the oil price crashed. At that time, the breakeven price for deepwater oil was circa $65, $70, probably more or less the same for U.S. shale oil. And basically, the breakeven price for deepwater projects went from $65, $70 per barrel in June 2014 to below $35 now. .

So the question, which obviously comes to my mind, is in this dramatic decline in this breakeven price. A big part comes from yourself, possibly as well from, I would say, from the fact that reservoir deep offshore reservoir were very prolific. Is it possible maybe to strike a balance between, I would say, general mature nature and what you bring to your customers?

So let me start with, I'm a reservoir engineer. So I love mother nature, and I love that Mother Nature put a lot of the hydrocarbon offshore. That's just the fact. The most prolific reservoirs other than the Middle East are offshore, period full stop, by any definition, permeability, porosity, Dorsey's law, you can follow anything you want to follow, oil in place, barrels in place, the -- it is just fundamentally better than other areas of, again, of investment for our clients.

So when you think about the equation dollars per barrel, it's never been about the denominator. It's never been about the barrels. Go back to what I said earlier. It's been about the cost of extracting those and the certainty of that investment. So back in that period in 2014, there was actually a report that was published. That said offshore projects were being delivered on average on average of 1 year late and on average of 100% above budgetary costs. That's not sustainable.

As again, as I said earlier, our customers are always smarter than us. That's the right approach to take in business. So they recognize that. So we were in a period where their offshore project economics were deteriorating because of execution and performance, whilst the providers on the service side, things are great. They thought things were great because they were seeing backlog, they were seeing backlog growth, revenue growth, margin growth. But in reality, they were setting themselves up to fail. And I was part of that. I'm taking responsibility for that.

So somebody had to do something different. We chose to be at somebody. There was no certainty that it was going to be successful, but we decided to radically change the way offshore would be developed in the future. That started by taking an equipment manufacturing company, FMC Technologies and merging with an installation company, Technip, had never been done before.

Our customers always bought the equipment from someone and had someone else install that equipment. And they sat in between and manage that interface, which often led to most of the delays these projects that were being delivered on average of a year late was largely due to that interface. -- because there's a lot of synergies and there is a lot of value between he or she who makes it and he or she who installs it, if they have aligned interest.

In a non-integrated project, there is no aligned interest. It's actually the opposite. You make more money by causing hardship and hard ache on the other provider, which the client gets punished by in the form of variation orders. So what we said is, look, let's be the adult in the room someone needs to change the game.

So we created TechnipFMC with the idea that our clients could now through a single contract work with the architect because 2 years before that project ever is discussed publicly or Cs FID, we're designing the architecture. So you can work with 1 company to go from the architectural phase, through the equipment manufacturing phase through the installation commissioning on the seabed and very importantly, through a life of field service contract, which is an OEM model that is typically a 20- to 30-year service contract, one provider. That's the decision we made.

That's what led to the creation of TechnipFMC on the 17th of January 2017. And here we are almost a decade later, as you pointed out earlier, still as the only integrated offshore provider, creating a very unique scenario for us and probably the one statistic that I would ask you to remember that really creates the investment opportunity for you, which is 80% of our business is direct awarded to our company never goes to a competitive tender.

Because as I said earlier, we have created a scenario where our customer wins at the same time that we can win. So we do that by that relentless pursuit of the reduction of cycle time we have taken up to 1 year off of a 3-year project for a big new development for an existing development where we're just adding additional infrastructure. What used to take 26 months, we can do in 14 months. You can call us, we can do the architecture design, we can manufacture, we can install, we can commission, and we can have it producing within 14 months on the seabed.

That is a huge benefit to our clients, cause of the quality of the reserves, not only in terms of the production, but also in booking those reserves, which is important when they talk to you in the investment community as how they are sustaining the growth of their company by identifying and booking additional reserves. So that's kind of how this has all played out. It's dramatically different than it had been in the past.

As long as we continue to focus on the relentless pursuit of reduction of cycle time, as long as we continue to make those economics much more attractive offshore, the capital will continue to flow. And we've seen that. The point that -- the one data point maybe that you didn't mention, Guillaume, is the breakeven cost in the U.S. unconventionals has gone up, has almost done the opposite. It's gone from the $30s to the $70s, whereas we've gone from the $70s to the $30s. And it is sustainable as long as a company like TechnipFMC continues to drive change, technology and innovation that will continue to reduce cycle time. And I am confident that we can continue to do so.

Thank you very much, Doug. So let's jump in the present. So in the current environment, so we understand that I would say the structural shift towards offshore continues and is going to continue, that the structural element. However, given the increase of the price of the commodity, there is likely to be, I would say, a short-term up cycle in North America, probably over the next 12 to 18 months.

How would you view those two first, the long -- I know you do not like cycles, but the long structural trend towards offshore and the short-term likely increase in U.S. insurance?

So it's a fair question, but let's just start with the facts. We have not seen that yet. Correct. But there's been a phenomenal environment from a regulatory perspective. There's been a lot of incentive for that to occur, and it hasn't occurred. So one must step back and say why. Now look, I'm not pro or anti anything. I obviously have a bias to the offshore, but we also operate and do work on land, and we do work in the Permian Basin and other places in North America. So it's not us versus them, but I just think we have to look at the facts. We have not seen that occur.

There is something very telling there. If you step back and you look at the environment for investment and the fact that the investment did not follow, I think, one must ask themselves why. Number two, I think you pointed out very -- I think in the way you asked the question lies the answer. I think if we see that, it will be cyclical, and it will be very short cycle.

So yes, I think that the U.S. unconventional becomes that short-cycle cyclical barrel, but the structural change is the offshore and will remain the offshore. And again, that has to do with everything we've talked about thus far. And the fact that if you're chasing reserves and if you're trying to add more proven undeveloped reserves to your balance sheet, those big barrels, thanks to mother nature, as you pointed out earlier, happened to be offshore and will continue to be offshore.

So let's continue with the present. So at the beginning of the year, early 2026, the outlook for offshore was very constructive and was about to reaccelerate probably in H2 2026. So question I would like to ask you, you mentioned during the previous earnings call that what we are saying in April 2026 was already true in February 2026. However, could we say, to a certain extent that the conflict is nonetheless going to translate in a new reacceleration, a stronger than previously expected reacceleration and or towards an even longer cycle when we look over the next 3 to 7 or 8 years ahead. .

So yes -- and yes, but it's not a cycle. It's a structural change, but it will continue to support that structural change. So yes and yes is the short answer. The -- we have seen this transfer of capital flows from the U.S. onshore to the offshore some time ago. We had experience that this buildup. We published what's called the Subsea opportunity outlook, it's every quarter, we publish that.

It's a view of projects that are likely to reach FID or the final investment decision within the next 24 months. That list has grown quarter on quarter on quarter, that list has grown 30% over the last 2 years. It is at a record level in terms of the size of that Subsea opportunity list, which is at $30 billion today and continues to have a lot of support.

So -- we have definitely seen that. And that was all pre the wars actually and certainly pre the Middle East conflict that we're now experiencing.

When we -- if I answer the question slightly differently, what has been the reaction to that? Yes, clients are looking at ways to accelerate their production particularly in regions that are more less impacted. Let me use that word, less impacted. And again, if you can take an offshore development and call us and have us do the architectural phase, the manufacturing phase, the installation phase, commissioning, producing on the seabed in 14 months, that's pretty attractive. And can be some pretty substantial reserves that can be booked to the balance sheet as well as production that can be converted into revenue for our clients.

So we're seeing quite a bit of that, and that normally occurs in the more mature regions where there's already a lot of infrastructure and a lot of subsea development. But we're also seeing more and more conversations around, let's just say, rebalancing their risk profile. Just as you and your companies have a Chief Investment Officer that looks at the risk of the portfolio, we have enterprise risk management, and we look at risk within the investments we make as a company. Our customers do the same thing.

So they now have to say if we're going to invest that capital in a region that may be less stable, we had rated it historically versus where we are today, that may shift some of that to other regions. And again, just because of where that energy source is, which is offshore as we've indicated here a few times, you could see that accelerating developments in the offshore areas outside the areas that are in conflict today.

So the transition is obvious among those new regions. I think there is a region which really starts to be on the spotlight. It is Africa. So Namibia is probably accelerating as I think Total Energies now wants to move quite quickly with Mopin project. So maybe we've talked about history. Let's talk a little bit about geography. What should we know on what are, I would say, the interesting moving parts according to you in Africa as of today. .

Okay. So I got to give a shout out to my friends in South America first because I think it's warranted and will continue to be a major driver and then we'll move to Africa, if you don't mind. So really, the last decade has been about South America, what has occurred in Brazil, not just by Petrobas, but by Petrobras and the IOCs is actually quite phenomenal.

And we can talk more about that. It's been a very interesting market for us. It's been -- it supported a lot of growth in the offshore. And again, it's Petrobras, but it's also companies like Equinor, Shell, Caron Energy and others who are really driving the developments in Brazil. Then when you look at the rest of South America, you cannot ignore the phenomenal success that ExxonMobil has had in Guyana. It is a story that will be talked about for years to come. It's substantial. It continues to just perform at an exemplary level.

We're honored and humbled to be their exclusive partner. We do 100% of Exxon's work for the subsea in Guyana, and they continue to move forward at just a record pace with greenfield development after greenfield development. A shout out to suriname, Total Energies what used to be Block 58 now called Gran Margo. We'll be doing that project as well. Again, that's another iEPCI 2.0 project. Very excited for the country of Suriname. It will be incredibly important for the for the people of Suriname and for the country of Suriname as they start to convert that into revenue as we have seen occurring in Guyana.

In addition, you have Colombia, you have Mexico and you potentially have Venezuela that is going to continue to make South America very, very attractive in the portfolio in the offshore world. If I do say what is the next big frontier, I would agree, Africa. Now it's important when we say that offshore subsea developments have been occurring in West Africa for many, many years. It's actually a very mature basin. When you think about places like Ghana, not Guyana. And when you talk about places like Nigeria, Angola, this has been a very mature basin. -- and will for quite some time.

But what we're seeing now is we're seeing customers go back and relook at their portfolios in Angola, Nigeria and Ghana and saying, okay, there's already existing infrastructure, can we do. Can we do some of these 14-month projects, as I mentioned earlier, what can we really do here differently than how we've approached in the past.

The national oil companies are being very constructive in their conversations with our clients as far as attracting investment back into those countries. And then you have the rest of Africa, which is really the emerging part of Africa, which, let's start on the east side. What is happening in Mozambique is profound.

People forget, we're already producing offshore gas in Mozambique. That's through E&I, who has now launched their second -- with their ongoing with their second project and talking about their third. Total energies with the Mozambique LNG project, again, an project for us, which is that integrated -- I'm sorry, that iEPCI or these integrated projects that we can do uniquely.

And then you move over and you look at places like the maybe Namibia and the Orange Basin, including South Africa. And as you mentioned, very exciting, not only for Total Energy, but also for others. And I think the opportunities there could be very rich as we continue to move forward. So indeed, Africa is an area that is very attractive in terms of offshore investment. We've been there a long time. We have well-established infrastructure in Ghana, Nigeria, Angola, we're launching and have launched infrastructure in Namibia, and then maybe we're active in Mozambique today.

Again, we've done the majority of the work in Mozambique. So it's very interesting. And there's other areas that we could see add to that portfolio. And it's interesting because it's a balance of oil and gas. You've got parts that is very heavily on oil and others that are very heavy on gas. So it actually is a unique balance, too, if you look at it from the continence point of view, and the gas tends to be on the eastern side, which tends to be closer to the end user assuming that gas is going to be converted to LNG, excuse me, and make its way to the Asian market.

Thank you very much. So before moving to the future, i.e. what TechnipFMC can do even better in the coming years and in order to try to be intellectually consistent. I'm going to read a question from the audience. So thank you for the writer of this question. So I'm quoting, it's always good to quote, it's good also. In a structural up cycle for offshore come, do you and the industry have sufficient capacity to deliver without significant oil service inflation and potential quality issue. Do you view -- are there any potential bottlenecks? .

It's a great question. And I think it's part of the story that I had left out. So I thank you to ever asked that question because it's an important part of the story. I said, we fundamentally changed what we do, but I didn't -- and then I said in how we do it, and I didn't really touch on the how. So this gives me the opportunity to touch on the how.

That question is 100% accurate, historically. That question is 100% accurate for anybody else who's working offshore because that's exactly what they're experiencing today. They're going to -- their capital costs are going to go up. They're going to have roofline. They're going to add vessels. They're going to add capacity. That will challenge the way that they do business, the quality of how they perform because we know in growth mode, that tends to negatively impact the quality of the work that's done, which then will deteriorate the offshore project economics, everything that I said at the beginning, we're trying to avoid.

So we had to change how we did business as well. So we have fundamentally changed the way that we operate our company and by utilizing first of all, the investment in technology, where we have gone from a configured -- I'm sorry, from an engineer to order. We were a bespoke manufacturing company. Our customer set the specifications for the equipment, new and different every single time. And then we built -- engineered and built that equipment.

That very much would lead to an inflationary environment because when that's the situation, there are no economies of scale. There is no leverage. You just take those requirements, you work on it, you make some mistakes. That's called waste in the lean world, you redo it, you try again, you deliver late, you deliver over budget, it repeat, repeat, repeat.

To avoid that, we invested heavily, and this is well over a decade ago from about 2013 to 2017 in changing our architecture. And when I talk about that, think about it, we're building small cities on the seabed, small cities on the seabed. And we looked at that architecture and we said, how could we do it differently? And we actually worked with the Lean Institute and with Toyota, and we adopted the lean principles of industrialization.

So we said we have to go from an engineer to order to a configure to order. So when you buy an automobile today from whomever your provider is, at least I want to believe they're building that vehicle just for me, and they're got a bunch of engineers doing drawings just for me. But the reality of it is even though they make you feel good because of those drop-down menus, they're doing 0 engineering. The engineering was done at the subcomponent level.

So they dictated the outcome by being able to take that thousands and tens of thousands of parts in a car, put those into these manageable elements call them subcomponents and then make those part of an ordering system that allows you to feel good about that you had choices, but it had no negative impact on them in terms of their delivery.

So we did the same thing for subsea equipment. Now it took a long time as I said, from about '14 to '17, and then we had to convince the customers to move in that direction. We call that Subsea 2.0. It is a configure to order subsea architecture. You can go on to your iPad as our customers do and order subsea equipment today from your iPad, series of drop-down menus.

So it's just profound difference. When that order is placed, it goes straight into assembly and test. We take out 9 to 12 months of engineering because every project was different in the past. Every product was different in the past that required 9 to 12 months of engineering before we could start to manufacture. We've eliminated that. Remember, I said we cut a year out of the schedule earlier. That's the secret.

But hard to do, easy to say, hard to do. Today, Subsea 2.0 represents the majority of our orders. We have never had a customer that has experienced Subsea 2.0 that has ever gone back to the old way of doing business. We are the only subsea provider of Subsea 2.0. Remember that other statistic, 80% of our work is direct awarded never goes out to a competitive tender. These are the reasons why, but we had to change the how and the way we work.

Now I want to -- since we're talking about the future, I also want to touch on the fact that there's a lot left in the tank. When we did all of that, what we're calling Subsea -- or what I just described as Subsea 2 point today, we did that before the merger with Technip. We did that from '14 to '17, we merged in 2017 and created TechnipFMC.

So when we originally worked, we only operated on the seabed. FMC Technologies only operated on the seabed. So we've done the Subsea 2.0 configure to order on the seabed, but now all of the umbilicals and the risers and the pipelines, everything that comes back up to the top of the water column, which is an enormous amount of additional opportunity for us is still able to be converted to configure to order from engineer to order.

Today, as we sit here, it is still engineer to order. So we're working on that now. And that is the big opportunity for us going forward is we will make that entire system configure to order, including the installation. So we've done the seabed, then there's the water call them, then there's the installation. So what we've said is we've only -- we're only 1/3 of the way there.

We have 2/3 left, which will allow us to continue to what, relentless pursued a reduction of cycle time, drive down cycle time, improve our economics, whilst our customer benefits because they're seeing shorter cycle time, which drives their project economics. It's not a pricing thing. It's not a pricing thing. And that's where fixed asset companies want to talk about pricing. It's not a pricing thing. We can benefit, but our customer benefits because of the relentless pursuit of reduction of cycle time, and we still have 2/3 of the way to go. So we're very excited.

When you envisage those next to come 2/3, you seem to be quite confident, meaning that you have identify the potential bottlenecks, the potential limitation, you have found technical or organizational answers to that.

You're trying to get me to give away the secret -- so what I -- look, what I can say -- well, let me start by saying I am 100% confident that the impact of the remainder will be as great as what we have already achieved. And again, if you look at what we've done and where we've come as a company, it's -- we're humble -- and I think it's recognized, but there is a lot left to be done. And again, this will continue to make offshore investment even more attractive, continue to grow the overall size of the market, continue to grow our our inbound, our backlog, our revenue and continue to allow us to have margin expansion as a result of that.

And we have that visibility. We're a unique company that we have that visibility because we're sitting on a approximately about a 2-year backlog as well. So we see that quality of that backlog continue to improve as a result of this.

Where we are in actually the technical solutions, I'm going to be careful here because there's a lot of work that's being done, but I am confident that we have some very viable technological solutions that are truly, truly revolutionary in the way that work will be done in the offshore going forward with the delivery of a reduction in cycle time without capital investment. This is the key. So then you start to look at indicators like ROIC, ROCE. You look at our balance sheet, you look at our net cash position, you start to say, wow.

So we have all understood that the strategy, which has been followed by TechnipFMC, is it still working? Integration is probably better, but how do you view this next to come potential merger? Could you provide us some -- with some colors about it? .

Sure. And no, it's not a -- it's a fair question. I don't hate the question. You're saying CEO. I mean, I think in life, be it for your family or for your company, you have to make decisions. The lack of making decisions, you're losing ground. You're falling backwards. So you have to make those decisions. You're not always going to make the right decision. And I think that's where you have to be humble and you have to just do what you believe is best.

And again, if you go back to the way we made the decisions we made, we put the customer first. If you put the customer first, the customer will reward you. We just talked about customers where we do 100% of their business. We have customers, large IOCs where we have done 100% of their business for over 30 years. We talked about the fact that 80% of our business is direct awarded and never goes out to a competitive tender. So we put the customer first.

Now that wasn't easy to do. because, again, back in that prior period of time when we were doing well you had to acknowledge that the way we were doing well was not helping the client. It was destroying their project economics, delivering late, delivering over budget. They had no certainty. Therefore, they shifted their investment to somewhere else.

We had to change that. And we've done that, and we've done that successfully. So when you look at strategic decisions that a company can make, there's to build it, there's to buy it and then there's do something radically different. And so you always hear a build versus buy. And what we're seeing now in the industry is a lot of buy, a lot of consolidation. And it's happening on the earn side and it's also happening on the services side.

That's okay. That's not something I subscribe to. I believe as a technology company, we have to be the one and really the stewards of the offshore and the stewards of the subsea, I believe we have a fundamental responsibility and almost a moral responsibility to do things differently. Now I'm going to repeat. We won't always get it right. But by doing that, we'll be able to drive substantial change. We'll be able to and create substantial value for our clients, for our employees and for our shareholders.

So all that you're seeing is a difference of philosophy, the traditional way of we'll let you buy and consolidate and leverage and that's that supply-demand kind of thinking. That is shorter cycle reward or the opposite whereas we're looking at doing things that are, again, going to set up for a very different long-term structural change. And I believe we're on the right path.

And more importantly, our clients have embraced this. Our clients have embraced Subsea 2.0, as I mentioned earlier, they've embraced the integrated model, the iEPCI. And the vast majority of our contracts are now IPCI 2.0 put together, and leads to these 80% direct awards. So we're going to continue to innovate. We're going to continue to work on the rest of the 2/3. We're going to continue to reduce cycle time. I talked about 26 to 14. We're not satisfied at 14 -- you start getting much below 14, you're now challenging cycle times of every other investment opportunity to have in their portfolio, including onshore.

Because you can drill onshore wells very quickly. But by the time you tie all them in because remember, it's not 1 well. You got to tie in 200 wells into a production facility, whereas in the offshore because of the production per well. It's just so substantially greater. It's -- we're very proud of the path we're on, and we're going to continue to stay focused. And by the way, I wish no ill will to others. And I hope that the result for them that they have a successful result as well because I truly just want to make sure that the offshore remains the most attractive investment opportunity for our clients.

There remains 4 minutes and 33 seconds. So if you have some further questions, please do not be shy. In the meantime, maybe I would say a more open question, if I may, so are there 1 or 2 messages you would like maybe to specifically highlight or which we haven't spoken, which you believe is important. .

Sure. I know I have a short period of time, but there are a couple of things we didn't get to touch on. I want to go back from the question from again thank you for that question. We have demonstrated the ability to grow this company without expanding the capital investment. We've demonstrated the ability to be able to grow this company because we are thinking and operating differently. The relentless pursuit of reduction of cycle time not only affects our customers, it affects us. If I can take 1 year off of a 3-year project, I've increased my capacity by 33%. So as simple as that.

So we don't have to build new stuff. We don't have to consolidate. It's not about more. It's about doing more with the same. And that's what's driving returns to levels that are extremely attractive to you as the investor. The other area that I also want to touch on is there is a lot to do beyond the traditional oil and gas market offshore. And we've talked a lot about that today. But there's a tremendous amount of opportunities.

Let's first start with the area of carbon transportation and storage. There's a lot of people who say are anti-fracking around the world. If you're anti-fracking you should be anti-C2 injection in your backyard. This belongs offshore. We're doing this now in the U.K., where we're taking carbon that is being sequestered, 145 kilometers offshore to be permanently and safely stored, 145 kilometers. That can only be done with all electric subsea technology.

And we're the only ones who can provide that, and we're doing that project today for BP called the Northern and Orange project. Another example would be in Brazil. Brazil has a very high CO2 content in the oil that they produce. Today, that's being produced to the surface to a floating production storage offloading facility that needs to be treated separated and reinjected. So you're being it all the way to the surface, allowing it to potentially be exposed to future greenhouse gas releases only to be reinjected in the reservoir.

We worked with Petrobras for 7 years. We have developed a technology that will allow us to separate the CU on the seabed. It will never see the environment. It will be separated on the seabed, reinjected on the seabed, which again is a huge benefit, not only from a greenhouse gas point of view, but also from allowing our customer to produce more of what they want, they value to the FPSO, which is the oil without having to bring the associated CO2.

Another area we continue to be believers in is offshore floating wind, not fixed bottom that is economically challenged, but offshore floating wind. It's time will come, we are very proud. We've invested and developed a technology for a high-voltage dynamic in our rate cable. It is the highest quality specification power cable that exists today.

We're able to do that because as a subsea company, we're used to things moving around, so we understand dynamic versus static. And we have partnered with Prismen, who's the leading provider of ocean bottom electric cables, and we'll be bringing to the market an integrated approach like we have in oil and gas, which will be iEPCI or an integrated project for offshore floating wind.

But you'll be able to -- today, it's 40 different contractors, we'll be able to take that package from the water column down, somebody else will make the turbine, we'll do the rest. We will take it from the mooring systems, the power cables, the communication and the long-term service contract associated with that into the offshore floating market.

And the final thing that I'll say because I know we're running out of time, is the seabed is 70% of the world's surface areas covered by water. We all know that. We learned that in school. But people don't really think the inverse of that means 70% of the world's surface is underwater. We like underwater. We understand how to live and how to work and how to breathe and how to do things underwater.

We work on the seabed 2 miles deep in the ocean. Everything is advanced automation, robotics and control. We often don't get thought of as that type of a company. We put things on the seabed that are designed to last as the equivalent of with Nasaputs on the moon or on Mars. So if you really think about what we're doing, it's quite phenomenal. And I think I'm going to run out of time.

Thank you very much to all of you. Thank you very much, Doug. So we spoke about Most, I would like to conclude and maybe some of you are going to smile with a quote from Mother Teresa, yesterday is good, tomorrow has not yet come. We have only today. So let's begin. Thank you very much. .

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 TechnipFMC First Quarter 2026 Earnings Conference Call. [Operator Instructions]

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

Thank you, Regina. Good morning and good afternoon, and welcome to TechnipFMC's First Quarter 2026 Earnings Conference Call. Our news release and financial statements issued earlier today 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 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 Pferdehirt, TechnipFMC's Chair and Chief Executive Officer.

Thank you, Matt. Good morning and good afternoon. Thank you for participating in our first quarter earnings call.

Our quarterly results reflect strong operational performance throughout the company, driven by solid execution. Total company revenue in the period was $2.5 billion. Adjusted EBITDA was $453 million with a margin of 18.2% when excluding foreign exchange. Free cash flow was $277 million with total shareholder distributions of $285 million in the quarter. This early momentum positions us well to achieve our full year financial targets.

Turning to Subsea. Orders in the quarter were $1.9 billion, driven by robust services and unannounced project activity. Our inbound highlights the importance of strong and enduring customer relationships as we continue to benefit from a high level of direct awards to our company. Importantly, we see a strengthening trend in order activity as we move through the year, supporting our confidence in achieving $10 billion of Subsea orders in 2026.

Turning to the Middle East. Our thoughts are first and foremost with the people who have been affected. The well-being of our employees and their families is paramount. We took immediate and comprehensive measures to ensure the safety of our teams in the region. We were able to operate safely with minimal disruption. As a reminder, only 4% of our revenue is derived from the Middle East. This is almost entirely related to work we execute through onshore activities within our Surface Technologies segment. Our offshore operations in Subsea have not been impacted.

Even before the conflict, the queue of potential deepwater projects had been expanding over the last 5 years. The significant impacts to both security and energy supply resulting from the conflict are likely to have lasting impacts on the perceived risk assigned to the region. We believe this builds further momentum in the ongoing shift in capital flows toward offshore developments with the potential to accelerate opportunities in markets with extensive infrastructure, including the U.S. Gulf and the North Sea in regions with previously discovered and well identified resources that can add material volumes to an operator's reserve base such as West Africa.

Our Subsea opportunities list highlights several of these opportunities. With our quarterly update, the list now identifies approximately $30 billion of opportunities for potential award over the next 24 months, representing the seventh consecutive quarterly increase in value. Over the last 2 years, this list has grown by more than 30% when using the midpoint of project values. While all global regions have experienced growth during this time, the most significant increases have come from Africa, Asia Pacific and the North Sea. The average project size has expanded to nearly $800 million driven by more than doubling our potential developments over $1 billion versus just 2 years ago.

Additionally, this list now includes 22 distinct clients, which speaks to our expanding customer base. This trend has been supported by our unique capabilities an integrated execution as demonstrated by our proven iEPCI model. Looking ahead, we believe there will be a step-up in inbound orders in 2027 and extending through the end of the decade. Importantly, this growth will be supported by iEPCI, Subsea 2.0 and Subsea Services, much of which will be direct awarded to our company.

I now want to close with a few key messages. First, we remain focused on the relentless pursuit of the reduction of cycle time. With every activity we undertake with every change in process we pursue and with every capital investment we propose, we ask ourselves, does this shorten project cycle time. This unique mindset continues to serve as the fundamental driver to improving project economics, benefiting both our customers and TechnipFMC.

Second, as we continue to drive a different paradigm around capital investment, we are delivering improved capital efficiency and higher free cash flow conversion. Importantly, we remain committed to returning at least 70% of free cash flow to shareholders through both dividends and share repurchases. Lastly, our strong commercial success and high-quality backlog built upon an expanding mix of direct awards, iEPCI and services position us well to increase Subsea inbound revenue and EBITDA margin in 2027. TechnipFMC is in full growth mode.

I will now turn the call over to Alf to discuss our financial results.

Thanks, Doug. Revenue in the quarter was $2.5 billion, adjusted EBITDA was $453 million when excluding a foreign exchange gain of $13 million. In Subsea, revenue of $2.2 billion increased 1% versus the fourth quarter. Results in the period benefited from higher iEPCI project activity, particularly in Brazil. Project revenue grew sequentially in Latin America, Africa and North America, partially offset by lower revenue in Asia Pacific and the North Sea.

Adjusted EBITDA was $441 million, up 6% sequentially, primarily driven by the increased project activity. Adjusted EBITDA margin improved to 20%. In Surface Technologies, revenue was $284 million, a decrease of 12% from the fourth quarter. The sequential decline was primarily driven by the scheduled timing of project-related activity in the Middle East with only a minimal portion related to the regional conflict. The decline was partially offset by higher completion activity in North America. Adjusted EBITDA was $50 million, a decrease of 15% sequentially, largely due to the lower activity in the Middle East offset in part by higher collision activity in North America. Adjusted EBITDA margin was 17.4%, down 60 basis points from the fourth quarter.

Turning to corporate and other items. Corporate expense was $37 million. Net interest expense was $6 million and tax expense was $96 million. Cash flow from operating activities was $332 million, with capital expenditures totaling $56 million in the quarter. This resulted in free cash flow of $277 million. We repurchased $265 million of stock in the first quarter when including $20 million of dividends, total shareholder distributions were $285 million. Cash and cash equivalents was $961 million. We ended the quarter with a net cash position of $540 million.

Moving to guidance. For the second quarter, we expect Subsea revenue to increase high single digits sequentially, with adjusted EBITDA margin improving approximately 300 basis points to 23%. For Surface Technologies, we anticipate revenue to decline low single digits sequentially with an adjusted EBITDA margin of approximately 17%. And as previously indicated, we expect corporate expense to decline approximately 25% in the second quarter. This assumes the remainder of our annual guidance is evenly distributed across the remaining 3 quarters when using the midpoint of the range.

In summary, I am pleased with the team's performance in the quarter. The solid financial results are tangible evidence of our continued success in driving greater operational efficiency. These results also reflect our continued success in winning high-quality backlog for future execution. The strong performance gives me confidence in our ability to meet our financial commitments for all of 2026.

The Middle East remains a key driver of long-term growth for Surface Technologies, but it's also important to put our exposure into proper context. Today, Middle East revenue for the segment represents just 4% of total company revenue. And for Subsea, when we consider the remaining $5.2 billion of backlog scheduled for 2026, along with the balance of our expected services revenue. We have revenue coverage of approximately 95% when using the midpoint of guidance.

So let me close on just 2 simple points. We remain very confident in our ability to exceed $2.1 billion of total company EBITDA in 2026. With each segment contributing to EBITDA in line with their full year guidance and the operational momentum and improving commercial backdrop gives us high confidence in our ability to deliver continued growth in 2027.

Operator, you may now open the line for questions.

[Operator Instructions] Our first question comes from the line of David Anderson with Barclays.

So it's been a long time since I've heard a service company talk about being in full growth mode here. So obviously, we're looking towards '27, you're getting pretty optimistic. Just curious how much of that has to do with what's happened in the last 60 days and how this impacted the deepwater cycle? Are you expecting FIDs to kind of accelerate from here? I'm just kind of curious your customers? Are they getting more confident in long-term oil prices? Just some insight into how they're thinking about deepwater, please?

Thanks for the question, David, and it gives me an opportunity to clarify. I could have made the same statement in prior quarters. Certainly, last quarter, we talked a lot about the growth of the market in terms of the Subsea opportunity list, which again grew this quarter for the seventh consecutive quarter, now achieving $30 billion, a 30% increase over the last 2 years. So we talked about -- we talked about that aspect a lot last quarter and how that was going to translate into a step-up in inbound orders for TechnipFMC from 2027 through the end of the decade.

So the short answer would be we could have made the comment prior to the conflict. What is true, David, is, indeed, our customers are looking at their portfolios. We are in discussions on opportunities to accelerate both brownfield tiebacks as well as some greenfield developments. At the same time, our customers are looking at replacing their reserve base. The reservoirs offshore are prolific, they're well known, and the economics now are extremely attractive by our ability to be able to reduce cycle time and accelerate time to first oil. If you complement that with a higher commodity price, yes, clearly, those project economics look increasingly interesting to our clients.

So Doug, Subsea 2.0 has obviously been a game changer for you. You talked about reducing the cycle time that has been critical there. Just curious how that's tying into what you're seeing in terms of Subsea margins for '27. You're guiding them higher.

Can you talk about kind of what percent of that revenue you're expecting to be Subsea 2.0 within kind of the '27 number and how that's trending forward? I know we've been talking kind of looking historically, the last kind of year or 2, Subsea 2.0 has been something like 80% of some of your orders. Can you just sort of talk about the orders and into revenue and how that's sort of impacting your margins in the '27?

Yes, David, I don't have an exact number. We haven't rolled that forward, if you will. But if I think about where we are today and where we would likely to be in 2027 in terms of the revenue being recognized from the Subsea 2.0 orders, I would put it in the neighborhood of about 50%, perhaps a bit north of 50%.

What's important is what you also said, which is 80% of our new orders are coming in with Subsea 2.0 is representing about 80% of our new orders. So that obviously demonstrates the glide path that we have to improve the efficiency simply by converting the higher-quality backlog as a result of our customers' acceptance and the significant impact of Subsea 2.0 and the integrated model, iEPCI, is having on shortening cycle times and improving their economics. And as I said in the prepared remarks, we're happy is when our client wins and we win.

Our next question comes from the line of Scott Gruber with Citigroup.

Yes. So it looks like we're probably going from a good market to potentially a great market. And so I want to dovetail off the full growth mode commentary.

You guys have obviously increased your own internal capacity with Subsea 2.0. But just curious how you're thinking about preparing the organization for additional growth, especially if there are some kind of pull forward on some projects. Do you anticipate any constraints, whether that's potentially roofline or engineers or vessel capacity? Just give some color on needing that growth and what you're doing to prepare to meet that.

Sure. Scott, thank you for the question and an important question. And I think something that really differentiates our strategy and the vision that we laid out now almost 10 years ago, and I have been executing against it, both in terms of Subsea 2.0 and iEPCI, creating TechnipFMC back on the 17th of January 2017. So I guess or approaching that 10-year anniversary.

What is true, Scott, is that every single day and every single decision that we make, we ask ourselves will this, whatever this is a change in process, change in structure and investment, whatever it may be, will this reduce cycle time? Why is that important? Reducing cycle time allows our customers to win, while we also win. So it's a true scenario where both sides are satisfied and complementing each other. But it also means we can do more with the same. It's as simple as that. If we can reduce cycle time, I can take whatever that is, people are planned, and I can get more capacity because I'm doing things faster.

So this doesn't just affect the manufacturing. This is everything we do in every part of our company, Alf has finance organization and everyone else throughout the organization is looking at ways that we can be more efficient. That means our people, by the way, are more satisfied because we reduced some of the mundane redundant type tasks that they have to perform. They're doing more value-added work, which is much more motivating. And quite frankly, we can generate more with the same.

So our ability to be able to do that, which we have much more to go. There's more runway ahead of us to be able to continue this journey that we're on is what allows us to continue to grow without being constrained or without having to have a big significant CapEx expenditures. As you may have seen, CapEx this quarter was again in line, a bit actually below the guidance level, just a bit of a seasonal effect, but also demonstrates the fact that we are able to grow this company with the infrastructure that we have in place, and we'll continue to do that by becoming more and more efficient every single day by reducing cycle time.

I appreciate all that color. And then turning to your initiative to industrialized SURF. I'm curious, Doug, as you reap those benefits, which I assume includes some installation efficiency gain, how does that impact your overall kind of vessel needs and your vessel strategy?

I'll give you a short answer, Scott, since I gave you a long answer to the first one. It's really exactly what I said to the first comment. So it applies as much to Subsea 2.0 going through the manufacturing plant as when we start to think about the remainder of the industrialization of the work stream of Subsea, and just to remind everybody, we started now over a decade ago back in 2014, premerger, we started working on industrializing the sea floor. So all of the assets that sit on the sea floor not just the trees, but there's an entire village down there and really working on industrializing all of that infrastructure, and that's -- what we have referred to as Subsea 2.0 thus far.

When we -- post merger, we obviously picked up the water column and products in the water column. I think about umbilical, risers, flow lines, flexible pipe, et cetera. And then we also picked up installation capability. And we've begun that process, but we're only in the very early stages of the industrialization of, let's say, the remaining 2/3. So as we industrialize that, it will be the same concept. We'll do more with the same or we'll do more with less. And that's the entire strategy of the company, and we think we can be as impactful or more impactful than what we've already experienced from what we've done on the sea floor.

Our next question will come from the line of Arun Jayaram with JPMorgan Securities.

Yes, Doug, I know one of the core objectives of the company is to reduce cycle times. And I was wondering maybe as a follow-up to Scott's question, if you could maybe elaborate a little bit more on your SURF 2.0 strategy? It feels like you're putting together kind of a Manhattan project type of a group at FTI to tackle this objective? And maybe give us a sense of where you're at in terms of the process? You get any pilots going on today, maybe some of the technology you're thinking about bringing to the installation part of the SURF process to reduce cycle times?

Arun, I'd like to use the rest of the time on the call to talk about it, but it probably wouldn't be the right thing for me to do. And what I mean by that is we are in the concept select stage. We have a ton of really great ideas. We have a phenomenal team of individuals working on this, but I don't want to get ahead of them, and I certainly don't want to disclose anything that wouldn't be appropriate at this time I can only repeat Arun, I am as excited and I think the impact will be as important as what we did on the sea floor.

And now having had the pleasure and the opportunity to have been involved in both of these, I can say with great confidence that the impact will be significant but I really need to be careful not to go much further than that right now, Arun. But we -- our customers and hopefully, you all have the confidence that we've demonstrated that we think differently that we approach challenges differently and that if we bring something to the market, it will be significant and meaningful and structurally change not only our company but the industry.

Yes. Fair enough. Fair enough. My follow-up, Doug, I was wondering if you can give us a little bit of an update on the flexibles segment at FTI. One of your peers talked about their plans to maybe double some of their capacity in Brazil. I know the industry is working on some solutions to tackle CO2 corrosion for flexibles, particularly with Petrobras.

But just maybe give us an update there and what kind of visibility do you have in that business and your ability to meet what looks to be a really good market for flexibles.

Sure. I'm going to go a few different -- come out from a few different angles here. Let me start by saying flexible pipe is an integral part of our iEPCI offering. So as the Subsea architects, and we're the only ones out there actually involved very, very early in the life cycle of a project. working with our clients to unlock the full economic potential of the project.

Often flexible pipe is a key contributor to the architectural design allowing us to have not only meet the functional requirements but to be able to do it in the most efficient manner. So it really is a key offering of ours. It's an area that we continue to be the market leader, both in terms of the specifications of our flexible pipe, but also in the ability to meet the market demand.

So that's important to us as well. It's an area we continue to invest in, not only as a result of what we're doing with iEPCI today, but as we look towards the future together. So very exciting about that.

On the stress corrosion cracking angle that you mentioned, yes, the industry has -- is a well-known industry problem. The industry has been working on it. We have been working hand-in-hand with Petrobras for several years. We are well into the qualification phase of our definitive solution for the stress corrosion cracking challenge. And we'll be able to say more as we continue to advance through that qualification program with Petrobras. I was just in Brazil, I will tell you they are very pleased with our technical solution, which is different and unique to us. And they are also very pleased with the pace of the qualification and the success that we're having in the qualification.

Finally, in terms of the global demand and the global capacity, it's not just for iEPCI. We do use flexible pipe outside of iEPCI. We obviously prioritize it within the iEPCI projects that we have, but we also have just some direct flexible contract awards. An example of that would be Petrobras in Brazil. We have always been their leading flexible pipe provider. I think you should expect that to continue to be the case. Often, we are the only ones who have the technical -- the ability to meet certain technical specifications. And in other cases, it's a more generic technical specification that others can also participate in that activity.

Keep in mind when I said we're industrializing more than just the seafloor. So when you think about our approach to our capacity, that's going to be by increasing efficiency through the plant. We have multiple flexible plants not only in Brazil, but outside of Brazil. And as we look every single day to industrialize and lean out the processes, we're finding the ability to increase the throughput quite significantly through those plants. So we are increasing capacity, but we're increasing capacity by improving efficiency, not extending roofline.

Our next question will come from the line of Victoria McCulloch with RBC.

Can you start with a quick shot on Subsea Services. There were notable contributor in 1Q order intake. Can you give us some color on how that addressable market has evolved on a quarterly basis over the last year? And how much of the $10 billion order intake do you expect to come from Subsea Services?

Well, in terms of the -- how has it evolved? Victoria continues to grow quite significantly. I think if you look back over the last several years, we've indicated that it would be about $2 billion or about 20% of our revenue this year. It continues to be quite a significant contributor it's been growing at a pretty steady -- well, I'd say, a slightly accelerated rate. It's been in line with the growth of the overall segment. Quite frankly, that's only because of the strength of the growth of the market. I think if you look at kind of the underlying and sustainable growth rate of Subsea Services, which is what gets us most excited it is quite significant.

And you should expect that this location at some point in time, and it's not going to be anytime soon just because, again, the overall market is growing so significantly. But the dislocation will be that the Subsea Services growth rate will continue for an extended period of time. And that's quite important to us. As you know, this is an important contributor to the financial performance of our company. It's a differentiator. As we continue to grow and have the success that we've been having as a result of everything we've talked about earlier on this call, which has increased our position in the market, which means we have a much larger and ever-growing installed base on the sea floor. All of that needs to be maintained. All of that needs to be inspected, et cetera, and that is an OEM model where we perform all of that activity on our own infrastructure.

So it's important today, and it will be even more important as we move forward.

And just a follow-up one for Alf. Obviously, Q1 incredibly strong free cash flow and CFFO despite working capital outflows, can you give us some insights into how you expect cash and working capital to look for the remainder of the year?

Sure. No, thank you. Indeed, the first quarter free cash flow was to us a very solid start. We see consistent execution in both our segments really and the strong Subsea backlog that we have continued to really fuel the free cash flow generation throughout the year. The working capital usage that you see in this period is primarily really due to the annual incentive plans that we pay once a year. And we do that in the first quarter.

So that is not something that we expect to see be a headwind in working capital in the same way as we go through the year here. And as you also -- as Doug already pointed out, the capital expenditures are well under control. We expect clearly to be at the guidance where we are anticipating capital expenditures to be, which is just above 3% of our revenue. We continue to see that we will convert from EBITDA at about 65% conversion from EBITDA into free cash flow. And when it comes to thinking about how it goes for the rest of the quarter, the best I can say at this point is we expect a fairly evenly distributed free cash flow across the remaining quarters of the year.

Our next question comes from the line of Marc Bianchi with TD Cowen.

I wanted to ask about the Subsea orders first in the first quarter here. So maybe the headline was a bit lower than the midpoint for the year, and you talked about confidence going forward. But I'm curious about the composition of the awards in the first quarter because you didn't have anything large that you press released or large that you mentioned in the press release for the quarter.

So I'm wondering, is there a message here about the recurring small award composition and kind of the breadth that maybe we could take away as we think about the go-forward order level?

Sure, Marc. Fair question. As you know, and you've got the experience, there's no way that this is ever going to be linear. It always comes and goes. It can be a matter of a few days at the end of 1 quarter or a few days at the beginning of the other quarter. I can only strongly reiterate my confidence that we will achieve $10 billion for the full year, and nothing should be read into Q1 other than the kind of second part of your question, which was a very strong quarter given the fact that the amount of announced awards -- versus the amount of announced awards.

So look, I just want to reassure everybody that the underlying business is very solid. You see the strength of having the installed base that you -- that we have. You see the show up in our Subsea Services you see the strength of the customer relationships that we have in the direct awards as a result of that, that shows up into the large portion of unannounced awards. And look, embedded in the quarter, there was a large project that we will be announcing once the customer gives us the permission to announce that award here sometime in the near future.

Okay. That's helpful, Doug. And then on the surface guidance, I guess just considering the commentary in the press release, how it didn't seem like there was a big effect from the conflict, and it's only 4% of revenue. I was surprised to see it down just given the strength that everybody is looking for in North America.

Can you kind of unpack what's driving second quarter if there is an assumed war impact and what your sort of macro assumptions are around that?

Yes. This is Alf here. I'll take that one. So first of all, as I as I kind of mentioned in my prepared remarks, backlog scheduling in the Middle East is a big portion of the answer here. So even before the conflict, the backlog scheduling not as high in terms of activity levels in the first half of the year. So you're just continuing to see that spillover into the second quarter as well.

But the reality is that -- that is still a far bigger effect on the overall than the content itself. So that's an important point. We continue to see strength in the back half of the year. We continue to see that our U.S. business is doing well. We are introducing technologies in our U.S. business that is driving our activities and they are creating efficiencies, both for us and our clients. And that is also supporting a more favorable margin mix.

So when you look at surface for the full year, you should probably, at this point, expect that the revenue will be slightly lower compared to full year guidance. But on the other hand, the offset is that we are seeing an opportunity for stronger margin performance. So overall, we expect that the total EBITDA dollars for surface will be in line with whatever you see implied by the midpoint of the current guidance.

And just to be overly clear, the Subsea guidance remains unchanged. And thus, what we are confident in is what I said before. We will exceed $2.1 billion of company EBITDA. It's just that the mix a little bit on the surface right now could be tilted a little bit towards lower revenue but higher margin.

Our next question will come from the line of Caitlin Donohue with Goldman Sachs.

You mentioned seeing an order step up in inbound into 2027, which you anticipate to drive further earnings growth. Can you walk us through where you're seeing the most inbound geographically? Particularly as we now may see a move towards more incentivized exploration, whether this is greenfield versus brownfield work?

Sure, Caitlin. I'm happy to take your question. In terms of the 2027 inflection, it's really -- let me kind of talk about the big buckets that it's being driven by and then we can maybe get into the geographies. 2026 is going to be a year of a lot of smaller awards as we just saw in Q1, fewer big announced awards. That was always -- we talked about that back in 2025. We saw that kind of -- it was just a period of time. And a lot of that is a result of the contribution from some of the new and emerging markets that we've also been highlighting for quite some time. That -- and what we're seeing is that those will really be -- they'll have some impact on 2026, but the larger impact will be on 2027 through the end of the decade.

So think about it as new big contributors to the offshore space in terms of capital expenditures, that's 1 bucket. The other bucket is this continual flow of capital from the unconventional U.S. onshore to the offshore as customers are focused on reserve replacements as customers are focused on bringing in some of these very prolific offshore reservoirs. Now that they have the economic means to be able to achieve that, not because of the increase in the current commodity prices I spoke to earlier on the call, but because of their increased confidence in our company being able to deliver an integrated 2.0 contract to them on time, on schedule or ahead of schedule, shortening cycle time, improving their economics and giving them certainty in that outcome. That's very, very important to them.

And then finally, yes, we do see now with a higher commodity price potentially being around for longer than many anticipated that, that will also have a contribution -- a positive contribution to those economics. And then finally, we were really seeing a shift towards offshore gas developments. And I would say we're going to see that a more balanced approach now with more offshore oil developments as well as the continuing drive up in the offshore gas developments.

So when you think about the offshore gas developments, now I'll get to the geographical part of your question, you're thinking about East Africa, you're thinking about Asia Pacific, Australia, Indonesia, you're thinking about the Eastern Mediterranean. When you think about the oil -- offshore oil developments, you're thinking about Latin America, be it Brazil, Guyana Suriname. You're thinking about the U.S. Gulf, you're thinking about West Africa. And I think those are areas that we'll start to see a lot of increased activity from as well.

And I don't want to forget my Norwegian friends. Also, when you think about the offshore gas, you should think about Norway and the significant contribution that it's making to Continental Europe gas supply by being able to accelerate projects in the Norwegian sector of the North Sea.

That's helpful. And then just a follow-up there. For the magnitude of the step-up post 2027, I know you said FTI is in growth mode and we're going to see some of these larger projects come in and towards the end of the decade. Can you just help frame the magnitude of what orders might look like over the longer term for FTI?

That's a fair question, Caitlin, and I thought I [ fill the buster ] enough on the prior question, I might have gotten away from it. No, I'm just teasing you, fair question.

Look, if we thought it was going to go from [ 10% to 10.1% ], we wouldn't make such a bold statement. So I would consider it a bold statement.

Our next question will come from the line of Derek Podhaizer with Piper Sandler.

So I appreciate the company's advancement in making offshore markets more short cycle than longer cycle. But given the current oil prices and macro, renewed focus on energy security. Just wanted to ask about the shortest cycle barrel of the offshore markets, maybe from a regional perspective?

And how FTI can support that and have exposure through that maybe whether it's brownfield tiebacks, electrification or the Subsea Services piece. So maybe, Doug, just some thoughts around the shorter-cycle barrel of offshore and your exposure into those markets?

An important question, and I referred to it earlier in the conversation when we were talking about some of the recent client conversations that we're having. So as they look around their portfolio, they've always got a list of what they would call stranded reservoirs. That does not mean poor quality reservoirs. It just means the reservoirs don't have the reserves in place or the barrels in place to be able to justify their own development. So then the way that those get developed is through technology and innovation that will allow those smaller or stranded assets to be tied back to an existing infrastructure, wherever that may be floating something or a fixed bottom something or back to the shore just depending upon which country and which we're working.

So we are absolutely spending a lot of time on working on those stranded assets. It's the shortest cycle time to bringing barrels online because you're not waiting and building or having a large capital expenditure around building a host facility. In this case, the host facility would exist. The role that we're playing is one, from a technology point of view, it's Subsea 2.0 plays a big part of that because remember, in the old Subsea world or, let's say, the way that the rest of the industry is operating today, when they take an order from the moment they take that order, that order is a fixed to that client and that project. It can never be used for someone else or for a different project even for the same client because it's built to a unique specification.

With Subsea 2.0 when we take a 2.0 order pretty much up until the time it's delivered, we can modify that because it's just a series of features that we add or subtract onto that core product meaning it can be shifted from one asset to another from one client to another, and we have real examples of how we've been able to do that to help our clients accelerate their developments and accelerate their production levels by doing such. And again, we always refer to the automotive industry. Think about the automotive industry. When you order a car, that is not your car. The engines already been designed, the transmission has been designed, the frame and the chassis has been designed. It's only yours when they put everything on when they put all the pieces together, apply the final paint color then its yours.

And so it's a very similar approach, and it's really changed the game for our customers, and they're really beginning to recognize that attribute that it provides. So that helps in the short -- that helps shorten the shortest cycle barrel. The other way that we do that is through our OE electric system. And the OE electric system allows us to increase the distance from those host facilities to look for these stranded reservoirs and to tie those back.

And then finally, it will be the way that we do the rest of the project or the rest of the work stream, meaning the water column as well as the installation. And as we talked about earlier, that's a portion -- that's a big effort that's going on within our company today to look at how we can industrialize that. So we have the 2.0 seafloor. We have the OE electric today, and in the future, we'll have even more. So our belief that today that we can continue to reduce a significant portion of time off of an offshore development where as we've already taken anywhere from 9 to 15 months off of the cycle time of a project, we believe there's even more to come in the future.

Got it. That's very helpful and encouraging. Maybe just switching gears up. Just curious if there's any updates around some of the new technologies or R&D projects you're working on with third parties or start-up communities in the new energy sector or bringing some onshore industries to the Subsea. Just maybe some updates around there -- around that, some of the advancements you're making?

Derek, that's another one I'd love to talk about, but it's probably not appropriate. But yes, please rest assured, as a company, we are looking at challenges that are occurring in the world today. We look at them from a different perspective. We look at them from what could be done. 70% of the world is covered by water. The seabed is quite attractive, at least to us, it's quite attractive. And how can we leverage that portion of the geography in a different way than people have considered using it today. I won't go much further than that, but so lots of kind of innovative thinking around that, in the area of new energy specifically.

The work that we're doing in carbon transportation and storage continues to be very important to us. I just got back from Brazil where we were focused on our HISEP project. And Petrobras is very pleased with the progress that we're making. This will be the -- again, this is a very novel technology, the first time that CO2 will ever be separated on the seabed and reinject it, meaning it doesn't come up to the FPSO. It's never exposed to the atmosphere. So it's a significant improvement in the way that things are done today and also debottlenecks in existing production facility for Petrobras, allowing them to produce more oil and generate, obviously, the financial benefit from that.

So that's a really interesting project and it's going well. And then in the North Sea, we are going in June to participate with my peers there. And with our clients, we're looking at -- that's where we're taking CO2 that's being captured from the meters onshore and then we're taking at 145 kilometers offshore for permanent storage offshore. Again, these are really novel technologies. That one is enabled by our OE electric system because you wouldn't be able to do that with hydraulics and certainly not be able to do with hydraulics all on the sea floor like we can with the OE electric.

So yes, some really neat things, Derek. There'll be more to talk about in the future, and we look forward to the opportunity to do so when the time is appropriate.

Our next question comes from the line of Samantha Ho with HSBC.

Doug. I wanted to spend some time on surface. I was surprised to see in your prepared remarks that you called out higher completion activity in North America. And I was just wondering if you could elaborate on that.

Sure. So thank you, Samantha. Your question was on surface and completion activity and surface?

In North America.

Yes. Okay. Sure. So we did see North America had a strong contribution. As you know, there was a an acceleration in the conversion of wells that had previously been drilled but uncompleted to complete those wells that obviously consume -- we provide the surface assets to be able to allow that to be accomplished.

We're not seeing a big recovery in the North America business, if that's maybe what you're wanting to -- if that's where you're wanting to go. It's been a pretty steady business for us. What's most important for us in that business is how we're transforming our product offering within that business. So moving away from the commodity products where there's a significant number of competitors doing the same thing we are and really focusing on our digital offering which we call [ cyber frac ], which allows us to be able to automate the entire completion well site and actually allows our customers to be able to monitor and operate the assets remotely from their own office, wherever that may be.

And you would have heard about this in the past. The drillers do that for the drilling and the frac companies do that for the fracking, but we've actually put in place now an architecture that is an open architecture, allowing us to plug in the various service providers, including ourselves, on the well site, but in a fully integrated approach allowing a single interface for our clients, and that continues to make good inroads. And that's a very different business model for us as again, it's a digital offering with very minimal capital investment. But a very important financial contribution to the segment.

And as a follow-up, I was wondering if you guys have looked into maybe expanding into Argentina or Venezuela?

So we have -- certainly, we are and have worked in Argentina for quite some time, like everyone else or most everyone else, I should say. We worked in Argentina up until the sanctions and then we recognized and did the right thing and left when the sanctions were put in place. As we move forward now in Venezuela, we are looking at the opportunities as they present themselves. We are talking to our clients, both remember in surface, our clients are both the E&P operators, but also the service companies. So we are talking to our clients in Venezuela. And as they start to put together their plans their plans to potentially move back into Venezuela, then we will be there to support them as they need us.

But we're going to allow them to really identify an environment, an investable environment. And once they achieve that, then we'll support them. And again, back to Argentina, we've been there for a long time. We continue to be there. And yes, when we have a technology offering in the U.S., we also -- Argentina is a natural extension to take those type of unconventional technologies to that market as well.

Our next question will come from the line of Saurabh Pant with Bank of America.

Maybe I want to just go back to some of the line of questioning initially, right? Full growth mode uptick in inbounds in '27 and beyond. But just from a supply chain standpoint, right, I want to go back to that. I know Subsea 2.0 makes things easier, right? But as you look at your supply chain, Doug, right, I'm thinking things like castings and forgings and your own vendor base. How are you preparing your supply chain for the growth that you see coming?

And then related to that, things on the partnership side of things, right, especially on the vessel ecosystem, maybe just give us some color on how you are thinking that partnership structure you have worked to put in place. How is that looking in terms of supporting your growth outlook?

Sure, Sir. So let's do the -- let's tackle the supply chain first. First and foremost, I want to recognize my team. They've done a tremendous job, not only dealing with the uncertainties around the tariffs, which we manage quite effectively. But now looking at potential disruptions and how we can manage that. And at the same time, we're growing the company. So yes, indeed, that means the supply chain is also growing.

You said it earlier, Saurabh, the shift to a configure-to-order system or Subsea 2.0 and has significantly reduced our reliance upon the supply chain, and it has significantly reduced and/or eliminated their requirement to build things for the first time on a project-by-project basis. So when we talked about in the Subsea 1.0 world or again, the way that the rest of the industry is still operating, when they get that order, they've never built it before. So everything is specific to the specifications of that project. So by definition, it's a novelty or a new product.

So the same thing when they place an order with the supply chain, so in order to place that order with the supply chain, they have to do the drawings. They have to create all the building materials before they can even go to the supply chain. That typically takes 9 to 12 months of engineering. So you get an order, you spend 9 to 12 months of engineering and then you go to the supply chain and ask them to build something they've never built before. That's Subsea 1.0.

In Subsea 2.0, it's all pre-engineered preconfigure component including the components that are being manufactured by our supply chain. So at the time of the order, we place it flows naturally straight into the supply chain. We eliminate the 9 to 12 months of engineering, one of the key reasons we can shorten the cycle time on these projects, but also it's very important. They now are building something and they're getting quantities. They're not getting specifications to build something they haven't built before.

So Alf and I were actually hosting a charity dinner a while back for some of our key suppliers that were supporting a charity that we support TechnipFMC. And I always give them the opportunity and ask them, what could we do better, how could we work better with your company, and across the board, and this was suppliers from all around the world, they were thanking us for the way that we operate today. And just to put that into context, we sit down with them now on an annual basis. And on an annual basis, we say we're going to need 50 of this or 500 of this or 5,000 of this, but this is a defined product that they built before. Then by giving them the quantities, they can decide to do it divide by 12 and do it over a monthly basis. They could accelerate it and do it early and hold it on their balance sheet for us for future consumption. But whatever is easy as for them and whatever is best for their business model and for their capacity.

So it really has changed the way that things are done. We obviously retain redundancy to address challenges that occur sometimes around the world. So we have redundancy, but we have a much more streamlined supply chain I would say, a more sophisticated supply chain as a result of moving to the configure-to-order approach. And I'm sorry, Saurabh, I've already forgotten your second question.

So I was thinking on the partnership side of things, right? You addressed the [indiscernible] of things right to the partnership, especially the way vessel ecosystem.

No, no. Thank you for reminding me. So I don't want to start by saying the partnership approach also applies to our suppliers. So we spend a lot of time with our suppliers, like we do with our clients. We have partnership agreements like we have with our clients, we have with our suppliers. We like the way our clients treat us, and we think that's the way to treat our suppliers.

So first and foremost, they are part of the partnership. Beyond that, as you indicated, we also have partners with other providers of assets for us to be able to utilize on our integrated projects. The ecosystem is strong. And I will tell you the ecosystem is growing probably since the last time we've talked about it. We've added 1 or 2 additional companies to the ecosystem. There is a queue that will -- that also want to join the ecosystem. And we are considering those as we move forward.

So again, the success of the iEPCI model, the success of the direct awards to our company as other providers of assets, very interested and enticed to work with us to be able to have access to that market, which is now direct awarded to TechnipFMC.

That's fantastic color. And just a very quick follow-up, Doug. I know somebody asked this question every quarter, right? But I want to make sure we get an updated view on this, right? We're talking about growth, obviously, a lot today than we did maybe a year back. But in terms of the margin outlook, Doug, right, obviously, the 2026 outlook, we got Subsea 21% to 22%. Maybe just help us think through the moving pieces as you pursue the growth that you see ahead, right? Where can margins go? And what are the key moving pieces that we should bear in mind? Again, Subsea 2.0 is one of that, right? But just a reminder of the key moving pieces.

Sure, Sure. I also just gave you 2027. So I thought we were being pretty generous. Here, we are committing to not only inbound growth but revenue growth and EBITDA margin growth in 2027 for Subsea, just to remind everybody of that comment, which I think is pretty spectacular and speaks to the high quality of our backlog, our execution capability and our deep insight into the market and our customers' need because of the privileged position that they allow us to be in.

Look, the underlying fundamentals, it goes back to the earlier question about Subsea 2.0 and it's ever increasing contribution to the revenue. So I indicated that it would be going to about 50% in 2027, yet inbound levels are 80%. So you know that's going to continue to go up. iEPCI, the amount of integrated work that we're doing today and inbounding today is at an all-time high. That will continue to be converted into backlog, there's less and less low-quality historical legacy backlog left. So as that continues to get worked off, that's obviously a tailwind as well.

And then sure, the market and the market dynamics are also a position of strength, and we benefit from that as well. So -- but I try not to focus on that one. It's why I said it last but we really focus on what are the things that we can do, what are the things that are within our control, so that we build the sustainable business and continue to drive the financial results even higher. So thank you.

And we have reached our allotted time for questions. I will now hand the call back over to Matt for any closing comments.

This concludes today's conference call. A replay will be available on our website beginning at approximately 3:00 p.m. New York time today. If you have any further questions, please feel free to contact the Investor Relations team. Thank you for joining us. Regina, you may now end the call.

All right. Good morning, everybody. We're going to keep this thing going. My name is Derek Podhaizer. I'm senior analyst covering Oilfield Services here at Piper Sandler. So up on stage with me next, we have CEO, Doug Pferdehirt of TechnipFMC, ticker FTI. We're going to be discussing the offshore production cycle with Doug.

So look, Doug, I always like to -- I always like when you kick off these -- any fireside chats around framing how you structurally changed the landscape of offshore development. You talked about returning certainty to the market and the company's relentless produce -- sorry, relentless pursuit of reducing cycle times and increasing project economics. Could you provide your comments to the audience on how FTI is leading those efforts?

Sure. First of all, Derek, thank you for having us here, participating in the conference. Thanks to everybody in attendance and to those that are on webcast for your interest in our company. We deeply appreciate it.

So look, a decade ago, we looked at the economics in offshore and realized they were no longer sustainable. Projects were being -- the project returns were deteriorating due to the poor performance of the offshore project. Projects were being delivered a year late. Projects were being delivered 100% above the budgetary cost, just significant time and cost overruns. And this was somewhat the norm and actually accepted by our clients. But we looked at it as the offshore company and realized this was not sustainable.

So something needed to change. We were part of the problem. You have to acknowledge that. But then it's about developing the solution and being the solution. And we're really proud of what we've been able to do over the last decade. It's been 10 years in the making. But as we sit here today, we are now driving the cost curve down or we have a deflationary environment offshore versus other areas of capital flows, which are facing fairly significant inflationary effects. Now how are we doing that? We're doing it by the relentless pursuit of reduction of cycle time, shortening the cycle time accelerates time to first oil, dramatically improves our clients' project returns, of which we share a portion of the economic value that's created.

We also get the internal benefit of much greater efficiencies because we're doing things faster. We're doing more with the same amount of assets, if you will. So much higher returns, much better profitability and build a business that is now truly sustainable to where our customers have the confidence back in investing the offshore. It's important to understand the reservoirs were always there. I'm a reservoir engineer. The best reservoirs are offshore. The reason why the money was not going -- was going from the offshore to the onshore was not because of the quality of the reservoir, far from it, it was just simply because of the performance of the execution of the projects. So we fixed that.

We redesigned the Subsea architecture. We made it to where it's a configurable architecture, does not require any incremental engineering at the time of order. There's nothing bespoke. We're going off a catalog, using a configurator that allows our clients to be able to have what they need, have the choices that they need, but the certainty of the outcome. In addition, we merged FMC Technologies with Technip back in 2017 to create the only integrated offering. And this integrated offering starts all the way at the architectural phase where we design the architecture all the way through the building of that architecture, the installation of that architecture and then a 20- to 30-year life of field or aftermarket services OEM-style contract to support that architecture.

All of these things is what's making offshore extremely attractive to our customers again and what is now we're seeing the capital flows returning back offshore.

That was great, Doug. I appreciate that. Obviously, very exciting and one of the main reasons why your stock is up over 300% over the last few years. We always get kind of pushed back on that as far as just the mean reversion in valuation. But as you just laid out for us, we are a structurally different market here that you transformed the offshore. So let's just talk about the growth trajectory from here. We talk -- you talked about the Subsea opportunity list. I always like looking at that over $1 billion project wedge that continues to grow.

So maybe just in your mind, talk to us a little bit more about the future outlook with growth and maybe walk around the world for us pointing to the specific regions like those -- the emerging markets and what's getting you excited with that opportunity list?

Okay. Sure. So we published quarterly the Subsea opportunity outlook to give you all an idea of what's actually happening in the market. We break that down into different categories, projects that will be above $1 billion and then different increments below that. That list has grown tremendously. It's grown over the 6 -- the prior 6 quarters. It's now at $29 billion, which is a high watermark.

On the conference call this past quarter, I indicated that, that is likely to expand further in 2027 and also the $1 billion projects, Derek, that you mentioned, have doubled in just the past 24 months. So the number of billion-dollar projects has doubled, and that really has to do with some of the big greenfield opportunities within existing basins, but also new opportunities in emerging basins. So maybe to do that, I'll walk around the world to talk about that.

Now I think given the current events, it's impossible not to start with the Middle East. So I really do want to -- I do want to start there. It's important to understand that our company, although we're an offshore company and you hear about offshore incidents that are occurring, we do not operate in the shallow water market of the Middle East. So thinking about Qatar, Saudi Arabia, UAE, we don't do subsea work there. As a subsea company, it's shallow water, it's commoditized. We have not done that for decades. So we're not in that market, so we're not impacted by those activities in the shallow water market portion of the Middle East.

So just kind of get that on the table upfront. More broadly for the company, we do have a Surface Technologies business. It's a smaller business. We do operate onshore in the Middle East. But just to put things in context, 4% of our revenue is exposed to the region, 4%, so relatively de minimis. So now let's talk about the rest of the world, but I thought it was important to talk about the Middle East first.

So it's hard to know where to start. So I'm going to start with Brazil and just kind of go -- try to go around the world a little bit. It is an exciting time. There's more going on offshore than there's ever been. There's more new opportunities in offshore than I've ever seen in my career. But let's just start with where we are today, where we're seeing activity and where activity could be emerging from.

So if we start with Brazil, continues to be extremely active in the pre-salt, not only Petrobras but also other IOC operators that are now operating in Brazil doing very large projects. We -- in Brazil, there's the exploration work that's being done in the equatorial margin. This would be a whole new opportunity set within Brazil. Then you go to Suriname. Suriname has its first project FID by TotalEnergies where we're honored to be doing that work for them as an iEPCI 2.0, this integrated offering, 2.0 being this new architecture in Suriname.

Guyana continues to be extremely robust off of the success of ExxonMobil, where we're humbled to do 100% of the work for ExxonMobil and very excited to be able to be a partner with ExxonMobil in their activity in Guyana. Let's jump -- we'll jump over Venezuela for the moment and Trinidad and Tobago, and we'll jump up into the U.S. Gulf, probably the most exciting region within the U.S. Gulf, although there's a lot of activity around the mature parts of the -- the mature areas of the U.S. Gulf is the Paleogene. The Paleogene is the deep, high-pressure region. There, there's been 6 projects. We are on 5 of those 6 projects and most recently announced 2 additional projects for BP in the Paleogene an area that we're very excited about.

Now we'll shift over to the North Sea, lots of activity in the Norwegian sector of the North Sea. Also a couple of ongoing projects in the U.K. sector of the North Sea. But clearly, a focus on developing gas for the Continental Europe energy security and exporting that gas to Continental Europe. So lots of activity there. When we look at Africa, Africa is an exciting opportunity. And I think over the next decade will really be a driver of activity, and it goes from north to west to south to east. And you tend to have more oily on the west, more gas on the east but there's activity in multiple countries.

Some historical countries that haven't had a new development in over a decade that have recently announced new developments. And then on the Eastern side, you have an emerging areas like Mozambique, which there's now 2 -- 1 producing asset, 2 ongoing projects with the potential for additional awards in Mozambique. You have the Orange Basin, which we've all heard about, which is largely Namibia and South Africa, very exciting. There is projects that are now being actively in the tender pipeline there that we should start to see some project FIDs occur in that region as well.

Then if we shift over to Asia, it's really about Indonesia. Indonesia, large natural gas deposits important for LNG, as a source for the LNG. And we're starting to see those be FIDed at a pretty rapid pace. And that has a lot to do with the partnering between the Indonesian regulators and the Indonesia national oil company with the IOC operators moving those projects forward.

And then down in Australia -- Malaysia, Australia, we see a few more mature properties that we're doing, adding additional wells just due to natural decline rates, particularly in Australia, where you have a lot of LNG infrastructure, all that LNG is fed from offshore gas, subsea gas. So as those wells decline over time, they have to be replaced and replenished with additional wells.

So I probably left a few out, to be honest, but that's as quickly as I could get around the world. It's very exciting right now, the amount of activity again, within existing basins, new areas within existing basins and brand-new basins that are being developed at this time.

That's great. I think you hit on all the main regions. And maybe just to follow up, you talked about accelerating FIDs on the Far East side of things. I mean I think what we're seeing today with current events as far as LNG being cut out in Qatar impacting the Southeast Asia Far East market. Would you see almost even a further acceleration of the FID just when we start thinking about energy security just given what's going on today in the Middle East?

Yes. Look, I think it's hard to say anything definitive at this time. It's obviously an ongoing and a fluid situation, which we hope resolves itself and, first and foremost, looking out for the safety and well-being of our people and those who work with us. But what is true is the risk profile of that region has obviously been elevated, which will force capital to find other opportunities that maybe have a slightly lower risk profile. And we firmly believe in what we are seeing and experiencing is that is likely to go to other offshore basins around the world.

Right. That makes sense. And just to kind of get this question out of the way that everybody always likes to ask. You kind of laid it out already, but just order outlook as we think about 2026, 2027 on the last call, reiterated over $10 billion in '26, grow from there in 2027 back by that Subsea opportunity list and then maybe within your answer, talk about margins. And we don't talk about peak or mid-cycle anything just continuing to grind higher from here as you flow through more Subsea 2.0. Is that just still the fair way to look at you right now?

I think you summarized it really well. The only color I could really add to that is, clearly, we are in a growth mode. The company has been growing inbound. It's been growing backlog. It's been growing revenue. It's been growing margins. It's been growing free cash flow. And I think what we laid out with some of the recent updates on the Subsea opportunity outlook and some of the commitments that we've already made for 2027, companies are talking about Q1 of 2026, and we're talking about 2027 and making commitment. That's the type of visibility that we have, and that's the strength of the backlog that we have.

I think we're in for a period of continued growth. In terms of the margin, the margin isn't just because of the market growing and the volume growing, it's also because of what we are doing to completely reshape our company, much of which I talked about at the very beginning about how we've reshaped the company and reshaped the offshore industry to make it attractive again and to bring certainty, predictability and to make the economics, the most attractive economics for the capital to flow today, which is something we did not have for the past decade, but we've now addressed that. But we're doing a lot internally within our own company as well.

So when I talked about the ability to be able to do things more efficiently or reducing cycle time, I'll give you an example of that. The new architecture of equipment that we call Subsea 2.0, it's just a new architecture that's configurable. So instead of going from building something the first time or bespoke engineer to order, we're now doing this configurable product platform like the auto industry does. When you place your order for your most recent automobile that manufacturer is doing 0 engineering at the time you place the order, it's going straight into assembly and test. That's what we have been able to achieve.

The cadence, therefore, of the flow through our facilities is 2.5x the historical cadence. So we've created capacity just by having that additional throughput and it's just phenomenal and obviously shows up both in the margins as well as in the returns.

Great. So you brought up the 2 FIDs with BP in the Gulf, Kaskida and Tiber. And I think that was one thing that you really focused on the last call, this portfolio approach by your customers. I do feel like this is an underappreciated new dynamic in the industry that we're seeing today. So maybe help us understand the benefits of running 2 projects in parallel for you. And I know not to speak for BP, but from your perspective, why is this so important?

Derek, I would agree. I mean it's -- this is not business as usual. This is very different. Our customers in the past would initiate a project, wait for that project to be completed, take the learnings from that project, then attempt to reincorporate them into the next project. And the reason why in the learnings, and I'm being very gentle when I say learnings, was really because, as I said, it was typically cost overruns or schedule overruns. So with certainty that we've been able to bring back into the industry and into our customers has changed the way that they're approaching their developments.

They're now saying, we don't have to wait. We know this project is going to be delivered on time, on schedule. We have that level of confidence. They have that transparency and that visibility into our operations. We're doing these in a collaborative way, such that if we just roll into the next project, so right now be doing, if you will, simultaneous engineering or be doing simultaneous supply chain, what implications would that have from a portfolio approach? The answer is quite profound. Clearly, they see a cost benefit of doing that. We see a cost benefit. We share in that. We also see a much greater benefit in terms of efficiencies and the continuity is so critical.

This will now be done by one joint project team. So it used to be a stand up a project team that finished the project, they would go away, go do whatever they were going to do in their careers and you stand up a new project team. So when I kind of jokingly talked about knowledge transfer or lessons learned, it didn't happen. There was a deep cavern between the two projects, both in terms of time and in terms of talent. Now we have that continuity.

So this portfolio approach is something that BP embraced. I think it's absolutely -- and it's being looked at by others and some others are actually applying it as well. And I think we'll continue to see this not only in greenfield developments like BP is doing in the Paleogene, but as importantly in brownfield developments because these are multiple smaller projects that would benefit from a portfolio approach.

Yes. No, it's a very interesting and exciting dynamic to see. So obviously, we're having evolution of oil versus gas to offshore. I guess maybe for FTI, how should we think about the calorie count for the company, maybe the differences in technology for deploying oil development versus gas development?

Yes. Interesting question. We're definitely seeing more of a shift to gas. We talked about Indonesia, but there's multiple regions around the world, East Africa, the Eastern Med. We're seeing more gas offshore developments come into play, which I think makes sense and is something we certainly anticipated and certainly welcome.

From a company perspective, let me start by saying we're agnostic, be it oil or be it gas. It's -- we're agnostic to it. It doesn't have a large delta from a project cost point of view or revenue recognition point of view from us. But what is different between a gas development and an oil development, the requirements of our equipment for a gas development do tend to be higher level, more sophisticated. This is simply because of the corrosive nature of the gas and also the velocity. I mean, this is being produced at just tremendous velocities.

So everything has to go to where the pressure containing portion of the system. Everything goes through our equipment. And therefore, it has to be built in most instances to a higher standard and different metallurgies, different coatings, different techniques to be able to deal with that environment. So you tend to see a bit higher cost per unit in a gas field versus an oilfield development, but you also tend to have fewer wells on a gas development than in oil development. So it kind of nets out for us. But certainly gas, if it was one that I had to pick, we certainly have more differentiation in gas because of the higher technical requirements where we lead the way.

Very exciting. So let's talk about SURF 2.0, something you've been teasing a little bit here over the last few months. We talked about it at dinner last night, [ SPS ] versus SURF. I think it was 1/3 versus 2/3 as far as overall content for the company. I know it's early stages, but maybe help us in the audience understand how you're thinking about what SURF installation 2.0 could mean and could unlock for FTI going forward?

You made me nervous when you said we talked about it at dinner last night because it was a long dinner and an enjoyable dinner, but we talked about a lot of things. No, this isn't important. This is very important. So I just try to kind of simplify it. When you think about a subsea development, we start, remember back at that architectural phase. So we're designing the entire system. The system is really 3 components. It's what sits on the seabed. It's what's in water column and then it's the ability to be able to install, hook up and commission all of that equipment.

So those are really, if you will, the 3 phases and somewhat equally split, roughly equally split, in terms of the cost of those 3 elements. So back in 2013, a long time ago now, we started on the seafloor, architecture. And that's what we initially called Subsea 2.0. That's the configure-to-order like the auto industry, no engineering at the time of order, all pre-engineered configurable components, everything we talked about earlier. That was the seafloor. And that's all that we looked at because at the time we were FMC Technologies and FMC Technologies just had the seafloor.

When we saw the opportunity to merge with Technip and create TechnipFMC because we wanted to have that fully integrated system, all 3 elements of that, that's why we move forward with the merger, and that's this iEPCI, integrated EPCI, that we talk about. We had not addressed the elements of the other two, which came from Technip because that merger wasn't until 2017 and then we had a pandemic to deal with, and we had a major spin-off to deal with of an E&C company, all of which is behind us now.

So about a year ago, we actually have begun the process to look at the 2.0, which is the industrialization or this configure-to-order approach for the other 2/3 of the subsea development. This is what has us hugely excited because Derek was kind enough to point out the success that we've had thus far, but it's only been on 1/3. We have 2/3 left to go. So I can tell you this is what gets me out of bed every morning. This is what keeps me hugely engaged and motivated. It's what keeps our clients hugely engaged and motivated with us. It's why they're looking at portfolio approaches because they know we're going to continue to innovate and deliver on that other 2/3. That could be as compelling or more compelling than what we've already done.

Super exciting. So we've got time for two more questions. I do want to touch on Subsea services because this continues to be a pretty big growth tailwind for the company as your installed base continues to increase. So how should we think about the growth of that business, the drivers of that business and just the upside of the business as your installed base continues to increase here?

Yes, it's really important. I mean we have the world's largest installed base on the seafloor and it's growing every day, and it's aging every day. So I can say this because I'm at that point now to where every day I feel that I'm aging and I need a little more intervention from the medical field and the Subsea equipment is no different.

So it's designed for anywhere from a 20- to 30-year life. This is very sophisticated equipment. It's sitting on the seafloor in very harsh conditions. On top of that, we're typically operating at about 1 mile deep in the water up to 2 miles deep in the water, not into the earth, just in the water column. So obviously, not being intervened with by a human being, like you can on land. So this is all done with very sophisticated automation and control and robotics.

We have a bunch of robots down there, doing things to maintain the infrastructure that's in place. And again, designing -- imagine designing electronics to work in a saline environment, underwater for 25 to 35 years. Ask your IT guy, they don't like when you spill water on the keyboard, and that's the world that we live under in a saline environment. So it is pretty amazing work that we do.

We partner with NASA in terms of the development of the automation and control systems because although they're going up in the air and we're going below the water, it's actually very similar conditions that we have to operate in for our automation and control in our electronics. So look, all of that needs to be maintained. All of that needs to be inspected from time to time. Our subsea services, basically from the time the project delivers the equipment, they're involved in the installation of that equipment all the way through that life of field or aftermarket services contract.

That business will be about $2 billion this year. It's a reoccurring revenue stream. It is high margin. It's an OEM-type model. And it is extremely resilient, including when we went through the pandemic, we had very little change in our services activity. So something that is very important to us and something I think that a lot of investors have picked up on, starts to look more like an industrial, if you will, than a traditional oilfield services type application or a company.

Great. Appreciate that. And so last question, I want to make sure we show [indiscernible] love here with this one. Just latest thoughts on capital allocation, free cash flow generation, shareholder returns. I mean it's been a pristine story for you guys. So just where would you like to leave the audience on that subject?

Well, first and foremost, we are proud to be in the position to be able to generate the free cash flow that we're generating. And we're also very proud to be able to redistribute that back to you as shareholders. You entrusted and put confidence in our company as we now have grown and continue to grow and generate tremendous amounts of free cash flow and are in a position to redistribute that to you, $1 billion last year between share repurchase and dividends. We just announced a $2 billion share repurchase authorization.

We said we would deliver no less than 70% of free cash flow back to you as the shareholders, something we are committed to doing. The balance sheet is extremely resilient. We've paid down any near-term debt that is on the balance sheet. We're net cash, and we have -- we got about $400-some million of debt, so net cash of about $600 million. So we're in a position of strength. And our commitment to you is that we're going to be thoughtful in how we use those, how we use that cash and very comfortable continuing with the share repurchase and dividend program in terms of the distributions back to our shareholders.

Great. We're up on time. I mean I can spend another hour up here with you, but really appreciate you running the business with us, the outlook of FTI. Super exciting as always. So Doug Pferdehirt, CEO of FTI. Thank you very much. Appreciate it.

Thank you, Derek.

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 TechnipFMC Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions]

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

Thank you, Regina. Good afternoon, and good morning, and welcome to TechnipFMC's Fourth Quarter 2025 Earnings Conference Call. Our news release and financial statements issued earlier today can be found on our website.

I'd like to caution you with respect to any forward-looking statements made during the 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.

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 would now like to turn the call over to Doug Pferdehirt, TechnipFMC's Chair and Chief Executive Officer.

Thank you, Matt. Good afternoon and good morning to all. Thank you for participating in our fourth quarter earnings call. I am very proud to report our strong quarterly and full year results as we closed 2025 with solid operational momentum.

Total company inbound for the year was $11.2 billion. Backlog ended the year at $16.6 billion. Total company revenue for the year grew 9% to $9.9 billion with adjusted EBITDA improving to $1.8 billion, an increase of 33% when compared to the prior year. Full year free cash flow increased to $1.4 billion and shareholder distributions grew to $1 billion, both more than double the levels achieved in the prior year.

Turning to Subsea. Orders in the quarter were $2.3 billion, resulting in $10.1 billion of inbound for the full year with iEPCI projects being the largest contributor of inbound in 2025. There was also continued momentum for new opportunities within existing basins with bp Tiber being our most recent iEPCI contract in the Paleogene. Notably, TechnipFMC has been awarded 5 of the 6 20K projects sanctioned thus far.

The widespread adoption of our differentiated offering has clearly been a catalyst for our commercial success. Over the last 3 years, we delivered on our goal to inbound more than $30 billion of subsea orders. This has driven Subsea backlog to $15.9 billion with legacy projects now representing less than 10% of backlog. Given our expectation for $10 billion of Subsea inbound in the current year, we anticipate further growth in backlog.

Direct awards, iEPCI and Subsea Services represent an increasing share of our inbound. In fact, this combination accounted for more than 80% of our total Subsea inbound in 2025. We continue to be selective in the work that we pursue. We prioritize projects that utilize our iEPCI and Subsea 2.0 configure-to-order offerings. And our services business has been a clear source of differentiation, leveraging the industry's largest installed base. Most importantly, this high-quality inbound derisks project execution, enabling accelerated project timelines and increased schedule certainty.

The inbound secured in 2025 also speaks to a change in customer behavior with more clients adopting a portfolio approach to offshore development. Instead of focusing on the next project exclusively, operators are taking a broader portfolio view of their opportunities, executing a vision for their entire asset base. An example of this mindset is simultaneous development of greenfield assets where operators execute multiple projects in parallel, industrializing the entire field.

bp's approach to the Paleogene is an excellent example, where TechnipFMC is executing the Tiber and Kaskida projects at the same time, utilizing a consistent project methodology focused on our 20K equipment and integrated delivery. To be clear, this is not business as usual. Historically, operators would wait for the completion of the first project to incorporate learnings into subsequent phases. Today, those benefits are seen as incremental to the more substantive improvements gained from a portfolio approach.

By executing as a single unit, operators benefit from integration and standardization that enable them to reach target production more quickly and economically than would be possible as stand-alone projects. This shift in customer focus from a single project to a more comprehensive portfolio view clearly benefits from our differentiation with TechnipFMC's iEPCI model and Subsea 2.0 solutions serving as key enablers of this change in behavior.

The increased collaboration that comes with a portfolio approach also provides us with greater visibility into the project pipeline. Importantly, this early engagement provides us the greatest opportunity to help our customers more efficiently design and develop their entire program. Today, our clients are much more confident that they can build cost and schedule certainty into their expectations, and that is creating additional opportunities for our company.

This change in customer behavior also has a positive impact on the outlook for Subsea. We expect a greater share of capital spending to move offshore, where reservoirs are prolific, high-quality and accessible to many operators with attractive project economics that continue to improve. And we are seeing the impact of this change on our Subsea Opportunities list, with the latest update reflecting the sixth consecutive quarterly increase in value.

The list now highlights approximately $29 billion of opportunities for future development when using the midpoint of project values. This is the highest level ever recorded, and it was achieved even with a significant level of projects awarded in the period. And keep in mind, this only reflects a 24-month view and is not indicative of the full opportunity set for our company.

There are multiple new frontiers under consideration for greenfield development, more than at any time I can remember. Greenfields are unique in that they provide a blank slate. They have no preexisting field infrastructure where legacy architecture and technologies can limit flexibility in future enhancements. This makes a portfolio approach very effective for accelerating development in new frontiers, reinforcing our confidence and continued strength in offshore activity through the end of the decade and beyond.

I now want to close on a few key messages. First, 2025 was another year of exceptional performance for TechnipFMC. And I want to acknowledge the efforts of the 22,000 women and men across the globe. They take great pride in the company and are passionate about what they do. This is evident in our full year results, where continued strength in order inbound drove growth in high-quality backlog and continued strength in execution elevated the expansion in both EBITDA and free cash flow. This team has a strong desire to win and is unwavering in its commitment to deliver.

The second point I want to convey is that 2025 was another major milestone for TechnipFMC, but we are far from achieving optimal performance. We had great commercial, operational and financial success in the year, but the groundwork for these results was set in motion many years ago with our introduction of new commercial models and configure-to-order product architecture and our internal focus on the principles of simplification, standardization and industrialization.

While the impact of these changes is real and sustainable, we are confident that considerable upside remains. And much like our current success, it won't be dependent upon any one driver. We are confident that we will deliver further advancements in integrated execution. We will benefit from an expansion in configure-to-order offerings as we adopt them across more product platforms, and we will deliver greater operating leverage than what has historically been achieved in our industry.

Finally, I want to reiterate our commitment to the relentless pursuit of the reduction of cycle time. The actions we have taken, which are ultimately focused on driving project returns higher, clearly demonstrate our ability to create sustainable value for our customers and real differentiation for our company. We know that our work is not complete. We know that more value can be created. And with a culture focused on continuous improvement in everything we do, we also know that we have the right strategic mindset in place to make offshore investment an even bigger and more sustainable opportunity.

I will now turn the call over to Alf to discuss our financial results.

Thanks, Doug. Revenue in the quarter was $2.5 billion. Adjusted EBITDA was $440 million when excluding $52 million of restructuring, impairment and other charges and a foreign exchange gain of $1 million.

Turning to segment results. In Subsea, revenue of $2.2 billion decreased 5% versus the third quarter. The sequential decline was primarily due to lower activity in the North Sea and Latin America, offset in part by higher activity in Asia Pacific. Adjusted EBITDA was $416 million, down 18% sequentially, primarily driven by seasonally lower vessel-based activity and reduced fleet availability due to higher scheduled maintenance in the period. Adjusted EBITDA margin was 18.9%. For the full year, Subsea revenue grew 11% versus the prior period with Subsea adjusted EBITDA margin up 340 basis points to 20.1%.

In Surface Technologies, revenue was $323 million, a decrease of 2% from the third quarter. The sequential decrease was driven by lower activity in North America and timing of project-related activity in the Middle East, partially offset by higher activity in Asia Pacific. Adjusted EBITDA was $58 million, an increase of 8% sequentially, due to higher services activity in the Middle East and operational efficiencies related to business transformation initiatives. Adjusted EBITDA margin was 18%, up 160 basis points from the third quarter. For the full year, adjusted EBITDA margin improved 170 basis points to 16.7% even with revenue essentially flat when compared to the prior period.

Turning to Corporate and Other items. Corporate expense was $35 million. Net interest expense was $5 million and tax expense was $33 million. Cash flow from operating activities was $454 million with capital expenditures totaling $94 million in the quarter. This resulted in free cash flow of $359 million. Free cash flow for the full year was $1.45 billion.

We repurchased $168 million of stock in the fourth quarter. When including $20 million of dividends, total shareholder distributions were $188 million. For the full year, total shareholder distributions more than doubled versus the prior year to $1 billion. Cash and cash equivalents ended the year at $1 billion. Our net cash position increased to $602 million.

Moving to our financial outlook. We have provided detailed guidance for the year in our earnings release. I will now provide additional color on the guidance and our first quarter outlook.

Starting with Subsea. During the fourth quarter, we incurred restructuring charges related to simplification and industrialization actions being taken to further improve operating efficiency. As Doug indicated, our financial results and operating momentum remains strong, but we know we can achieve even more. These actions will deliver sustainable improvements in 2026 with additional benefits to be realized beyond the current year.

With that in mind, we are updating our previous Subsea guidance provided in October. We now expect revenue of $9.4 billion with adjusted EBITDA margin of 21.5% at the midpoint of the full year range. This implies growth in Subsea adjusted EBITDA of 16% when compared to 2025. For the first quarter, we anticipate subsea revenue to increase low single digits sequentially, while adjusted EBITDA margin is expected to improve approximately 50 basis points from the 18.9% reported in the fourth quarter.

Moving to Surface Technologies. We are guiding to full year revenue of just over $1.2 billion with adjusted EBITDA margin improving to 17.25% at the midpoint of the guidance range. For the first quarter, we anticipate Surface Technologies revenue to decline approximately 10% when compared to fourth quarter results with an adjusted EBITDA margin of approximately 16.5%.

And turning to Corporate. We are guiding to full year expense of $120 million with an expectation that we will incur approximately $40 million in the first quarter.

Lastly, I want to comment on our free cash flow guidance. We remain committed to a very disciplined asset-light approach to capital management. We anticipate capital expenditures to approximate $340 million for the full year, representing just over 3% of revenue. Additionally, we expect full year free cash flow to be in a range of $1.3 billion to $1.45 billion. This would imply free cash flow conversion of approximately 65% at the midpoint of guidance. And as previously indicated, we expect to return at least 70% of free cash flow to shareholders in 2026 through dividends and share repurchases.

In closing, I am very proud that we delivered on our financial targets in 2025. When excluding foreign exchange, we increased total company adjusted EBITDA to $1.8 billion, an increase of 33% versus 9% growth in revenue. We drove strong improvement in adjusted EBITDA margin for Subsea and Surface Technologies with increases of 340 and 170 basis points, respectively. And we delivered growth in total company backlog to $16.6 billion, up 15% from the prior year.

I'm also proud to share our full year guidance for 2026, which reflects continued operational momentum with total company adjusted EBITDA expected to exceed $2.1 billion at the midpoint of our guidance items. This represents growth in adjusted EBITDA of 15% versus 2025 when excluding foreign exchange with margin expansion in both segments. Lastly, we expect strong cash conversion from our growing EBITDA. And given the flexibility provided by our strong balance sheet, you should expect us to return the majority of this free cash flow to our shareholders.

Operator, you may now open the line for questions.

[Operator Instructions] Our first question will come from the line of Arun Jayaram with JPMorgan Securities.

Doug, I wanted to see if you could elaborate on your thoughts on margin expansion potential from industrializing the SURF process. And you talked about this morning in your prepared remarks about delivering further advancements in your integrated project execution. So just wondering if you could maybe shed some light on your thoughts on industrializing the SURF process to drive margins higher.

Thank you, Arun. Look, I'd be happy to. As I noted in, I think, a prior quarter, when we started down the path of industrialization and the configure-to-order product architecture, which we call Subsea 2.0, that was prior to the merger. So we're obviously focused on the assets that reside on the seabed because that what was within the scope of FMC Technologies at the time. As a fully integrated company, we now have access to not only the seabed but the water column in addition.

So that is where our focus is now, is to expanding that configure-to-order applications and all the efficiency gains and all the improvements in terms of reduction of cycle time for our clients and improved project certainty in terms of the delivery of the projects, which our clients benefit from, to the remainder of the subsea environment you're referring to the SURF or, if you will, the water column. I will say this. I think that the opportunities there are as substantial as the opportunities we are experiencing now from the Subsea 2.0 architecture on the seabed.

Great, great. And just my follow-up, Doug, is you mentioned how 10% of your backlog is legacy, call it, maybe lower margin kind of backlog from a few years ago. But as you look at the margins that you're booking in backlog today relative to your Subsea 2026 guide of 21.5% for EBITDA, can you talk about how much visibility do you have on further margin expansion Subsea? How many years of margin expansion do you see when you think about that backlog versus what you've guided to this morning?

Sure. So let me start by confirming that we are inbounding at a level that is accretive to our backlog margin. And that's important. And that will obviously flow through revenue and then ultimately through EBITDA, EBITDA margin. So you will see that. And as you know, we have a substantial backlog already, which is very high quality, and we're adding additional quality to that.

Look, I've said this publicly, I want our clients to win. And if our clients win, they like us to win as well. So this isn't about pricing or this isn't about margin. This is about the relentless pursuit of reduction of cycle time and certainty. If I can sit down with a client and show them that we have the unique capability and the only ones who can deliver them a project on a significantly shorter time frame, accelerating their time to first hydrocarbon and giving them certainty in that outcome, then I share a greater economic value that I create.

So we feel that we have a long way to go in terms of the reduction of cycle time. Remember, this industry, we just started this with the creation of TechnipFMC. We have a long way to go. We talked about it in response to the first part of your question. There's even more scope within our own remit, let alone further innovation that we are working on today as well. So that is our focus. That's what we think about every single day. That's why we make our customers win. And that's why we win as well.

Our next question will come from the line of Scott Gruber with Citigroup.

Doug, you mentioned the renewed interest in greenfield developments. Just wanted to see if you could unpack that a bit more for us. Obviously, hearing exploration mentioned on some customer calls, but just how widespread is the renewed interest in exploration across your customer base and across geographies?

Yes, Scott. I'm going to parse the question just a little bit, right? Because there's greenfield developments and then there's exploration. And you're right to point out, exploration leads to future greenfield developments. But I want to make sure everybody recognizes or appreciates that there are substantial greenfield developments where the exploration has already been done.

These projects didn't move forward for a variety of reasons, including take everything I said to Arun's question in the inverse. The industry wasn't good about reducing cycle time. The industry was not good about certainty in terms of delivery. And because of that, the economics didn't necessarily support those projects to move forward. So we're seeing quite a few greenfield developments that the exploration has been done, that, if you will, have been in the queue.

In addition to that, you're hearing about increases in exploration budgets. You're hearing about new emerging basins being identified, be it the equatorial margin in Brazil. We're hearing about Colombia now. I mean, almost every day, we wake up hearing new news of new opportunities in the offshore environment. We would humbly like to think that's because we've given our customers the confidence and the ability to go back and really scrub that portion of their portfolio or their reserve base and look for those opportunities.

So really, Scott, they're quite global in nature. And I'm only parsing the fact that this isn't about waiting on seismic and waiting on exploration drilling. That's happening and that's good because that will continue to feed the hopper, if you will, and I kind of referred to that when I talked about through the end of the decade and beyond. But as importantly, there are opportunities out there that are being accelerated right now, and we have the tools and the kit and the ability necessary to accelerate those developments for our customers.

I appreciate that. And then a quick follow-up on Arun's question around the SURF standardization. It sounds like there's a big opportunity here, and I remember having a detailed discussion with you maybe a year ago or so about it. And I know this takes a while to execute on. But where do you stand in that process? And kind of how much more is there to go?

Yes. I thought I was going to get away without committing to it, Scott, so thanks for circling back.

Well, I wasn't going to let you.

That's fair. Look, we've been working on it for a bit. We're impatient. Our customers are impatient, and that's a good thing. But we want to make sure we do it right. But look, there will be more to come and we'll be excited to share that news with the industry.

Our next question will come from the line of Mark Wilson with Jefferies.

I'd like to ask, Doug, about the point you make about you see considerable upside still. And just to check how clearly returns have been coming through. Margin has been improving. Three years now of $10 billion inbound in Subsea and another $1 billion to come and more opportunities in greenfield than you've ever seen. So could I ask regarding the volume you see able to continue to do going forward, considering that CapEx also remaining just 3% of revenue?

You spoke in the past about no expansion to roofline was a key element of previous years. In terms of the capacity that's within this business, should there be more of a response beyond, I don't know, the $10 billion level? How much volume capacity do you think there is within your existing setup? And I think I particularly speak to the Subsea 2.0, if that's done at 2 of your 3 facilities.

Thank you, Mark. I definitely knew I wasn't going to get away with this one. So it's a fair question, and let me give you a direct response. So as you pointed out, we've had a healthy rate of inbound. We've had $30 billion over 3 years. We just now reaffirmed the $10 billion for 2026 but we're also showing a Subsea Opportunity list that is really expanding at a rate that we have not seen before.

If you look at the number of projects that were awarded in this quarter, i.e., they came out of the Subsea Opportunity list, we're talking about the net increase. But if you look at the gross increase, it was quite substantial and there's others to come. So as we look forward, and you're right, you're hearing this from our clients, which is more important. We're just basically gathering that information and sharing that with you. Their focus is on offshore. Their focus is on developing offshore reserves. Their focus is on adding reserves by focusing on offshore opportunities. And again, we're seeing that happen around the world across our client set.

And as we've talked about before, our client set has expanded quite dramatically 3 to 4x what it was historically. There's many new companies that are operating and performing offshore subsea developments enabled by the simplicity and the ability to work with one company, TechnipFMC, in an iEPCI 2.0 direct award manner.

But if I really kind of encapsulate your whole question and, to me, what it really comes down to is, is this $10 billion a magic number? Or where do we go from here? And I want to be very, very clear that the Subsea Opportunity list is both growing and accelerating, and we fully expect that this will be reflected in inbound order growth in 2027 and beyond

Our next question will come from the line of Derek Podhaizer with Piper Sandler.

Doug, I wanted to go back to your comments around your portfolio approach, specifically bp's Tiber and Kaskida. Maybe could you help provide us with tangible examples of how Tiber is leveraging the engineering and equipment progress with Kaskida to help drive down cost and increase your efficiencies? Ultimately, just trying to understand more what this means for your earnings power and margins moving forward, if you have more of this portfolio approach from your customers.

Sure, Derek. And look, all the credit goes to bp. We're humbled in order to be their partner in the Paleogene. I want to start with that. Working together in many, many discussions, we came to the conclusion that there was a different way of working than the historical way of working together. And when we looked at it, we knew we wanted to go towards standardization. We knew we wanted to have repeatability, the old saying, design one, build many.

But when you have large gaps of time and distance in between projects, when you introduce new project directors on both sides, our side, their side, when you introduce new engineering teams, both sides, our side, their side, et cetera, et cetera. And then you get into the supply chain and you're dealing with the supply chain that you turn on, you turn off, you turn on, you turn off, you're never going to get those efficiencies.

So bp decided to take a very different approach. We are extremely humbled and honored to be part of it. I don't want to get into, if you will, the dollar savings because I think that would be not appropriate for me to do. That's more bp's business. But they clearly are benefiting.

We clearly are benefiting as a result of the ability to be able to have continuity, visibility and continuity into our own manufacturing, also being able to have 1 single project team instead of sending up 2 teams and in the supply chain because our suppliers benefit from that visibility and that continuity as well. So again, I don't like to talk about margin. I'd like to talk about improving Subsea project returns, which benefits our customer and also benefits us.

Got it. No, that's very helpful. I appreciate that. And then maybe on Subsea Services, clearly a differentiator for the company. I think you previously guided that it should grow in line with your top line growth, which we have the guidance on. But maybe could you touch upon what your expectations are for the Subsea Services side of things? Is this an expectation around $1.92 billion for the year? Just maybe some more color and help on how we should think about services as we look into 2026.

So again, in line with revenue, so let's call it $2 billion.

Our next question will come from the line of Victoria McCulloch with RBC.

Just one for me on Surface Technologies, I guess, to slightly discussion, but a similar theme. You've seen a material increase in the margin over the past 12 months in Surface Technologies. You attribute it in the presentation to operational efficiencies. This is what you spoke to us about a year ago. But can you give us an idea of how this compares to your expectation and how this was delivered? And again, on that, on Surface Technologies, how much more is there to achieve there?

Look, very proud of the segment. As we talked about in a prior call, we took a decision to really look at that business, make some tough decisions, really focus on the right customers in the right geographies utilizing the right technologies, so if you will, high-grading our portfolio. That isn't a business, when you focus on market share, that ends up very well. So we took a different approach and we said, look, we're going to focus on quality, not quantity, and we're going to high grade our portfolio.

We've done that. It's performing very well, as you can see as a result of that. There were some incremental benefits in Q4. But as we move forward, we expect this segment to continue to operate at a very high level. It's now 65% of our business in Surface Technologies is in our international portfolio. We continue to benefit from the investments that we've made both in Saudi Arabia as well as in Abu Dhabi in terms of local content, local manufacturing. And so yes, that's how I would summarize.

The outlook remains difficult because of the North America market. But we obviously benefit from the strength of having the majority of our portfolio outside of the North American market.

And maybe just a follow-up to look at Subsea. Can you talk to us a bit about how your discussions with customers have been in a very choppy macro environment, but then reflecting how there is greater CapEx moving offshore? And we are seeing pressure certainly, and discussion points around resources and reserves alike.

Those are conflicting, I guess, points but more is being added to the Subsea. Do you think that potentially the market is more caught up in the stock pricing than your customers are when they have discussions with you? And how much does that benefit TechnipFMC from a, I guess, pricing perspective?

Sure. I would describe it this way. One of the benefits of being in the offshore market is our customers -- some of that near-term choppiness, if you will, is smoothed out. They understand, these are prolific reserves. These are prolific reserves. So when they're going after these, they have a denominator that's much different than any other investment opportunity they have in their portfolio.

So all that they're looking for is obviously a forward view of the commodity price and a confidence in the ability to execute the project both from their team as well as from the industry. And this has been the biggest change that has occurred in the last several years, is they have regained their confidence because of what we have created with TechnipFMC with the Subsea 2.0 configure-to-order product line and with our commitment to them and to the investment community of our relentless pursuit of the reduction of cycle time.

So we don't talk about price. We talk about improving project returns, which benefit our clients. As I said earlier, if it benefits our clients, it benefits us. And once you get that mindset and you get out of a fixed asset mindset of day rate utilization and pricing, you can really change your conversation with the clients. We have a seat at the table far earlier than anyone else, and they give us visibility, now as they look and take a project approach, that is unprecedented because they like what we're doing and they want to make sure that they have the access to our iEPCI 2.0 solution, which leads to this level of direct awards that is now over 80% of our business is direct awarded to our customer and never goes out to a competitive tender.

Our next question will come from the line of Dave Anderson with Barclays.

This is [ Eddie ] who came on for Dave who had a prior commitment this morning. Doug, you mentioned operators are increasingly taking a portfolio approach to their opportunities. Of course, this provides you with greater visibility on Subsea orders. But does this also maybe result in more content with this approach, where developing 2 projects simultaneously results in more content for you than if developed one after the other?

And do you expect more companies to start to adopt this portfolio approach going forward? Or is this really limited to a few select majors?

Sure, Eddie. Thank you. In regards to the approach, you're on to something. Very astute. Remember, we're the architects. So when we're talking about either a portfolio approach or an integrated FEED study leading to an integrated EPCI study, we are the architects. Now we will always design the field to ensure the best suitability for the reservoir, the best in terms of the relentless pursuit of reduction of cycle time.

But clearly, we are going to make sure that if we have any technologies that are applicable that are going to help meet those objectives, that we're going to incorporate those into the architecture. So the benefit of being the architect and the builder, if you will, it's pretty clear that there are benefits of being able to do both. And we're uniquely positioned as the only company that has the capability to do both. So that's the position we're in. So yes, to your point, it does create opportunities.

Now in terms of the portfolio approach, look, you have to have the asset base, right? So not all clients have a reservoir that has a clear line of sight to doing multiple greenfield developments. Sometimes it's a one-off development. And that's absolutely fine. That's absolutely normal.

But where clients have the ability to do multiple greenfield developments within a area, if you will, it's certainly applicable to any client. And bp is not the only one. I thought it was appropriate to pass the message about bp and what they're doing to Paleogene because it was a recent award, and I do think it's appropriate to do so. But others are looking at the same approach.

Got it. So a number of signs pointing to a 2027 inflection in offshore activity that seems to be reflected in your growing Subsea Opportunity list. But could you talk to customer behavior and what you're seeing from them? You've consistently mentioned sort of this growing shift of capital into offshore. I guess what innings do you think we're in, in terms of operators shifting capital to offshore? Just wanted to get your sense of if most operators are already there at this point or if we're still in the early stages of this capital shift into offshore.

Good question. And I don't want to answer on behalf of my clients. That would be inappropriate. I'm a service guy, I always have been. I know where I am in the food chain. I would just look at their behavior. And I think what you're seeing in their behavior is they are in the very early stages and they see a long runway ahead.

Our next question comes from the line of Caitlin Donohue with Goldman Sachs.

Doug, you mentioned the iEPCI and Subsea 2.0, representing a good portion of total Subsea in orders in 2025. Can you speak to your long-term expectations for this continued adoption? How do you see this flowing through to further margin expansion over the next few years?

Great question, Caitlin. We've identified -- we said that the iEPCI was the majority of our inbound orders this past year, which is really quite substantial. A new product architecture like Subsea 2.0 figure-to-order, introducing that into the market is one challenge. An even greater challenge is when you change the commercial model. So look, there was a point in time -- it was a few years ago admittedly.

But there was a point in time where I said if we could achieve 1/3 of our orders from iEPCI or the integrated approach, that would be substantial. We're obviously well beyond that. And when you look at the different applications around the world, neither iEPCI or Subsea 2.0 have any sort of a technical limit or commercial limit that they both couldn't go to 100%. What I did allude to in my prepared remarks, though, is in legacy fields, is Subsea 2.0 backwards compatible? Yes. Is iEPCI applicable in brownfield, greenfield, emerging markets, mature markets? Yes.

But sometimes you will find customers who just want to either repeat the past because it's a small tieback and maybe the last activity in that field or that region for them. So I think there's always going to be a percentage. But Caitlin, it's a fair challenge. And I think that we certainly approach every opportunity as iEPCI 2.0 until proven otherwise. And you will see and continue to see both iEPCI and 2.0. As a result of that, you'll see iEPCI 2.0 continue to grow in our inbound.

That's helpful. And then just one more question on the Subsea 1Q revenue guide. I know it's the increase sequentially of low single digits. Is that just more of a comment on a little bit less of that muted seasonality we're seeing in 1Q as a result of some of these macro factors? Or there are certain regions that you can call out that you're really looking out for some of this increased activity through 2026?

Sure. I'm going to give that to Alf and he'll get into that detail. But if you don't mind, I'd like them just to first kind of summarize the revision to the 2026 guidance because I don't want that to get lost on the call. It was an important element.

Thanks for the question. So first of all, just to summarize, we did raise Subsea guidance, as you probably all noted. It's an important piece of reaching company EBITDA for the year. The adjusted EBITDA, we expect to be -- adjusted EBITDA, about $2.1 billion. So that is built on a lot of the things that Doug talked about already. We clearly achieved our inbound objective in 2025. We have a growing opportunity list. We are committed to $10 billion and have a solid path to that. The high-quality backlog, all of those things come together and gives us confidence. And then the Subsea Services revenue and growth on top is giving us a $2 billion business.

So we thought it was important, as we were overall initiating guidance for the company, to update this. If you look at the margin profile of Subsea, and again, I want to point out that we are introducing through the restructuring charges we've taken this quarter, we're initiating actions, and we are further taking actions in 2026 to further boost our margin expansion, not only in '26 but also beyond. And I think with what Doug said, we are very focused on driving revenue and margin expansion into the years beyond 2026.

Regarding the Q1, it is definitely what you were talking about. There is nothing big happening or anything structural that you should think about more than the seasonality. We continue to have 2 quarters a year, where several of our vessels in our fleet is either drydocked. They might be in for maintenance or some sort of upgrade and taking advantage of the slower period, in particular in the North Sea area. And that's what you see pronounced, and you will continue to see some of that in the first quarter. But there is nothing really otherwise.

The underlying run rate of our Subsea business is very strong. And then coupled with all the things that we already said about our outlook and our ability to expand margins, we're confident in the overall guidance that we have given for Subsea.

Our next question will come from the line of Mark Bianchi with TD Cowen.

Doug, I'm going to ask you if you could to quantify two things to the extent you're able to. So first, on this portfolio approach that you're talking about and working with the customers, can you maybe help us understand how much of the sales funnel of opportunities that you're looking at? And I realize we've got the Subsea opportunity slide and then there's like all these other discussions that you're having that might not be on the slide.

So if you sort of take that together, is there a percentage of the stuff that you're discussing with customers that would be part of a portfolio approach? And then as we think about $10 billion of orders this year, more than $10 billion in '27 and beyond, what proportion of those orders would be coming from the portfolio approach?

Yes. Mark, hard to put a hard number on it only because, as I said earlier, it depends on the client and it depends upon their portfolio in that particular geography, if you will, because when you do the portfolio approach, it's more focused around a particular reservoir or a particular geography.

So I would say today, it's a smaller portion, but it's something that our customers are responding well to and, I think, looking at their own future developments,and seeing where and how it could be applied within their own opportunity list. So I guess that's the big difference, Mark, is we're sitting down looking at their opportunity list instead of, as we were in the past, sitting around waiting to receive a request for tender. So very different seat at the table than we used to have.

Yes. Okay. That's helpful. And then the other thing to quantify, and this is really just to maybe level set and understand. You talked about 80% of the orders being direct awarded, right, so with services and iEPCI and so forth. How much of revenue is coming from direct awarded projects maybe in '25, '26 and '27? Just so we can get a sense of the progression on the revenue side and maybe versus what the order percentage is.

Sure, Mark. So I think if you go back just a couple of years, we used to talk about 50%. I think 2 years ago, maybe 1 year ago, we started talking about 70%, this year, 80%. Projects take 2 to 3 years to flow through. So I think that gave a pretty good road map, and that's obviously going to benefit us going forward.

Our next question will come from the line of Saurabh Pant with Bank of America.

Doug, maybe I'll just dig into the whole Subsea Opportunity list discussion. The one thing that I'm noticing, Doug, is that there are more and more projects that are gas-directed versus just oil-directed, right? We remember a decade back, anybody struck a big gas reservoir, it used to be a disappointing moment, right? But we are more and more developing these bigger reservoirs that are part of the opportunity list.

But for you as the subsea architect, how much difference does it make if a project is oil versus gas? Is there any revenue intensity impact? Anything we should read into the complexity and, by extension, margin impact potentially down the road from just the whole oil versus gas dynamic in subsea?

No, it's a great observation. It actually is something we internally had anticipated would happen a bit sooner than it has happened. But we are seeing a shift towards gas, and that's partly driven by there was quite an expansion in terms of LNG capacity around the world. That's slowing down but you got to feed that. And I guess, the dots that people don't necessarily connect is other than in the U.S. and Russia, almost all LNG is fed by offshore reservoirs, not onshore reservoirs. That's a generalization but it's directionally correct.

So okay, two things happen. One, you have to develop the offshore assets therefore to feed gas. But then over time, you now have a massive investment in an LNG facility. You have to continue to feed that with gas. So you almost commit yourself to continuing doing subsea developments offshore once you build that LNG facility. So we see that happening around the world and we're obviously a beneficiary of that.

In terms of gas versus oil, we love everybody equally. That being said, a gas tree tends to be as a higher unit cost than oil tree, and it typically has to do with a more corrosive environment and the velocities that we need to be able to control and operate safely in a subsea environment. So net-net, a gas equipment tends to be more complex. It's better for us because it's more differentiated, and that's who we are. It fits better. It just creates even greater differentiation versus the rest of the industry.

But either way, we'll take either one. We're just here to help our customers reach their objective.

Got it. Right. Okay, okay. That's fantastic color, Doug. And then Alf, maybe one for you on the whole free cash flow discussion. Like you said, '26 guidance implies 65% conversion out of EBITDA at the midpoint. But we were talking about orders. Working capital is a big part of it, right? So if orders start to inflect again from that $10 billion annualized run rate in '27 and beyond, working capital should be a tailwind, again, just how you get paid from a timing perspective, right? So are we looking at a prolonged period, 2 to 3 years, where so free cash flow conversion out of EBITDA is going to be higher than that 55% working capital neutral number we were talking about on the last call?

Thanks for the question. So first of all, your observation is correct. We've had, first of all, a really strong and exceptionally strong free cash flow generation this past year, I think our cash conversion is actually mathematic close to 80%. And it is, in terms of the foundation for this, is always going to be both commercial and operational execution towards your goals. And that is the foundation of improving our working capital.

Now we are setting ourselves up for another strong year. We are clearly improving working capital once again from the same variables that I talked about, the commercials and operational side. And as well, we couldn't forget that our CapEx is being kept at a 3.2% level. However, having said that, looking out several years, there's always a mix of orders, et cetera, so you can never fully predict.

But in general, if we are able to continue to have good commercial success in terms of how work is falling into where we have commercial strengths to realize and, as well, we need to execute on this because it's not just commercial we'll be setting up, we need to execute on this. There is opportunity to continue this. But I would caution against just assuming that you can in perpetuity keep putting up better and better working capital numbers. Because every year, you start at a better position, and you need to improve from there.

And there are still, from some of the cash that you're collecting, you still need to execute, and that creates timing of where outflows could be higher. So I won't speculate out more, more than say that '26 is going to be a really, really good year where we improve working capital again. But I still think we need to focus on the neutral when we look in the very long term.

Yes. No, that makes sense, Alf, right? I mean, the whole point is that yours a very low capital intensity business, right? So on a through-cycle basis, your free cash flow power would be really strong. That's what I wanted to just get into.

Yes. Thank you. Clearly confirmed.

Our final question will come from the line of Paul Redman with BNP Paribas.

You mentioned earlier that you are the only company that is an architect and a developer. But I also wanted to ask, what are the risks about replication on iEPCI or Subsea 2.0 with your competitors? Because a company generating such fantastic margins growth, growth in backlog, you'd assume that companies would like to pick up and think about how, we could possibly challenge this. Are you seeing any actions by customers to copy what you're doing? Is it copyable?

Sure, Paul. The short answer is it's difficult. Many years ago, back in 2017, I said it took us 4 years, so kind of an idea of how much detailed engineering program it requires. Look, can others do it? Yes. We have never said we're the only ones that can do it. We were the only ones who chose to do it. We chose the path of integration while either our others have chosen a path of consolidation. Just a difference in strategy. We're going to stick with our strategy.

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

Thank you. This concludes today's conference call. A replay of the call will be available on our website beginning at approximately 3 p.m. New York time today. If you have any further questions, please feel free to reach out to the Investor Relations team.

Thank you for joining us. Regina, you may now end the call.

This does conclude our call today. Thank you again for joining. You may now disconnect.

All right. Good afternoon, everyone. Thank you for joining us today. We've got Doug Pferdehirt, CEO at TechnipFMC with us. Doug, thank you for taking the time.

Doug, the first question I wanted to ask is, FTI has been the poster child of services for all of last year. Stock has done really well. The multiple has rerated. There were some order concerns halfway through the year. Those order concerns have largely gone away. As you think about '26, as you think about the messaging for investors, what is the strategic focus point for you? And what would you want to highlight?

Sure. So first of all, thank you for having us at the conference. Thank you to Goldman Sachs, and thanks to everybody here in the audience as well as thanks for those that are joining via the webcast.

Look, very proud of the accomplishments in '25. I mean we're not publicly reporting yet, but clearly, '25 shaped up to be a very good year. Proud of the 22,000 women and men who delivered those results and continue to deliver those results. We've already gone out with guidance for 2026. We did that back in October, demonstrating in our subsea business, further growth in revenue as well as EBITDA margin and therefore, a compounding growth to EBITDA dollars. So a high level of confidence again in 2026, something that we remain very proud of and very confident in.

Look, this is a company that had to redesign itself, had to reengineer itself in order to make the offshore segment interesting again to our clients. And it's just about grabbing part of that capital flows and making sure that, that those capital flows are going into the offshore market. The way that we do that is by showing the ability to have the relentless pursuit of reduction of cycle time, which shows up for our customers in terms of acceleration of time to first hydrocarbon, improving their project returns, whilst at the same time for us, allowing us to share a greater portion of the economic value that we create, and that shows up in our margins, and it also shows up through the internal efficiencies that we've gained as a company.

To do this, this was a 10-year process. We actually started back in 2015, where we entered into a joint venture, which we call Forsys Subsea to really understand the value of integration in the offshore market. We consummated a relationship with Technip in 17th of January 2017, so many years ago in terms of creating this new entity, which would have the capacity, the capability to be able to deliver these integrated projects offshore, removing waste, removing interfaces, improving certainty of outcome.

At the same time, we redesigned the subsea architecture called Subsea 2.0, which we went and we designed a configurable architecture where our customers still get the choice of what they want at the end, but it's based on a set of pre-engineered components at the subcomponent level. So what we did by doing that was we went from a bespoke environment or an engineer-to-order environment where we were doing everything for the first time. That would include 9 to 12 months of engineering before we could even cut the first shaving off the block to now going straight into assembly and test, much like the automotive industry does.

So what we're seeing now is our customers have acknowledged and recognized both the Subsea 2.0 architecture as well as the integrated projects or iEPCI and the value that they're creating by reducing cycle time and increasing certainty. And it's that increasing certainty and improved economics that are giving them the confidence now to shift ever-increasing amounts of their capital flows to the offshore market, where we are the primary beneficiary of that.

That trend is in its early stages. We expect that to continue. We have a long runway ahead of us in terms of cycle time reduction, and our customers are, therefore, going to benefit from continuous improvements in their subsea project economics, and we benefit as well internally. So we've created a real win-win dynamic, which is unique in the industry to be able to do that.

So I think the setup is very strong for our company. There's a lot of runway ahead for us to achieve even better results with a proven model. So you have the certainty of a model that's been proven that's been accepted by the shareholder base. And now you have a company that has many opportunities to enhance and improve that going forward.

The one number that I'll say now, and I'll probably repeat at the end, if I remember, is 80%. 80% of our business is direct awarded to our company, never goes out to a competitive tender. To me, that really speaks to the differentiation and the success that we've created.

Doug, this is something that we were talking about last night as well. I want to ask you on FTI, the stock has done so well, everyone, the most important or most topical inbound for us is stock has done really well. Offshore activity might be picking up in the second half of the year and into '27 really. So the rate of change in some of the higher beta offshore service names might be higher. But we were talking about this yesterday. Do you want to talk about that dynamic? What would be your pushback to them as you think about the relative positioning?

Sure. And I'll probably get in trouble for this. So let's just have a little bit of fun. And I'm not here to sell anybody else's equity, and I'm obviously biased. I believe in going with the winners. And I don't know how more directly to say it than that. And I think you're not betting on a portion of the cycle. This isn't a cyclical bet. You've got a company that has redefined, reshaped itself. The industry around us has reshaped itself. It is a very unique market that has a growth element that we just discussed, that has a very different market structure than it has in the past with a company that is getting 80% of its business direct awarded by the customers because the customers see the value that we're providing to them. There's a reason for that, and it's substantial.

So to me, I don't want to get into picking one part of the cycle or not. By the way, happy everybody is excited about offshore again. So let's just start with that, right? There was a point not so long ago,where there was a lot of [ skepticism ] about the offshore market. So the fact it's -- if you want to play the offshore, go for it, I think you're doing the right thing. Obviously, I'm biased. And I think if you want to have the most successful -- be the most successful in that investment, I would go with the proven entity that's got the winning track record. And it's not -- I mean, there's a lot more to go.

I think if you believe that we have achieved the level of full optimization or we can't improve upon where we are today, then I would understand an investors' sentiment and maybe looking at other opportunities. I think that would be a mistake because there's a lot more to go at FTI.

Doug, you've previously spoken about offshore economics improving quite a bit over the years. You've played an important role there in terms of the efficiencies that customers are getting. Are you a little surprised looking at how resilient U.S. production has been? Is there anything that you would want to highlight there, maybe your time line lag because that's what we're hearing from some investors or some companies as well? And how do you think that changes? Or does that impact the way you think about the economics, relative economics at all?

Yes. No, look, I'll let others talk about the North American market. We work in the North American market, but it's only 10% of our business. So I want to be fair, let others talk about the North American market, the resiliency element of it, whatever angle you want to take. We're just looking at it in terms of capital flows. And clearly, the reservoirs offshore are much more prolific. They have a much lower decline rate and therefore, the project returns are substantial.

The reason why the offshore kind of took a step back was the emergence of the U.S. unconventional and some of the early economics of the U.S. unconventionals, but more importantly, because of the deterioration of the offshore project economics. That was our fault as an industry, and we were part of that, and we have to hold ourselves accountable. That's why we reinvented the company. Everything I talked about in the opening, that's why we did that because we observed that through our own performance and the performance of those around us, we were leading to a deterioration of offshore project returns. And clearly, the customers were going to look for other flows to other capital flows for those due to that deterioration of economics. It just so happened that the U.S. unconventional appeared at that point in time, and that became the transition.

So look, we look at it very simple. We have to beat the economics of U.S. unconventionals, which we do today. Clearly, we do today. Our customers have -- it's demonstrated by our customers' order flows. And we're going to continue to work really, really hard to further improve those through greater efficiencies and shorter cycle time as we move forward.

You have a strong position in Guyana in Brazil. Do you want to talk about the region-specific outlook that you're seeing? Anything that you would like to highlight from a frontier region that could be new people are not talking about and just regional color in general?

Yes. There's quite a few. Maybe we'll just kind of go around the world a little bit. So look, let's start in Brazil. Many of you have heard about the equatorial margin. This is extremely exciting. It is a whole incremental leg of growth. I would call it -- it's a new frontier, not new -- it's not a new country, but a new geography within an existing -- obviously, within an existing offshore producing country. And Petrobras is extremely excited. We're extremely excited. All indications from the seismic are it could be very meaningful. Obviously, the exploration needs to be done. That's underway now, and we'll learn a lot more from that. But that's a region that we focus on and is a very important region to our business.

You mentioned Guyana. I still think of Guyana is emerging. I think it's phenomenal what ExxonMobil has done because it's also now almost thought of as a mature basin. And if you look at the time line in which ExxonMobil has achieved what they've achieved in Guyana, it is just hugely successful and unprecedented. We are humbled and honored to be part of that. We do all of ExxonMobil's work in Guyana, and it's been very important to us, and we continue to demonstrate exemplary performance there and be rewarded by ExxonMobil in terms of continued direct awards in Guyana.

Suriname. Suriname Block 58, now called GranMorgu with TotalEnergies. We're very proud to have been to receive that award, IPCI 2.0, first project in Suriname. We are anticipating additional projects in Suriname. There's other operators who are looking to potentially FID projects as well as Total looking at their portfolio now in Suriname. So that continues to be very interesting as well.

If we shift across the ocean, West Africa will continue to surprise to the upside. It's been a bit quiet. I will acknowledge that, but I would be aware of the fact that there could be some substantial moves in West Africa in terms of incremental activity. The Eastern Med as an emerging entity continues to be quite strong, and that goes anywhere from Israel, Cyprus, Egypt, all continues to be quite meaningful in terms of offshore, and it's gas on top of that.

If we go to the East Africa, Mozambique, I think at this conference last year, I said there's been one project. Don't be surprised if there's multiple projects. Well, there's now multiple projects going on, a second project for ENI and an initial project for Total, which we're participating in both and very honored to do so. And I think there will be further activity in Mozambique, also a gas region.

The Norwegian sector of the North Sea remains very active, again, supplying gas to Continental Europe. And then when we look at Asia Pacific, it's really about Indonesia. Indonesia, again, gas, very interesting, multiple projects being tendered at this time, projects underway, but also multiple projects being tendered by multiple operators. And I think Indonesia will remain very active and very strong. And then back here in the Gulf, we have the Paleogene, which continues to be, I'll be candid, it's moved at a faster pace and a faster cadence than I anticipated. We've done multiple projects or are currently doing projects for multiple customers. We're producing 20,000 into Paleogene today.

And just last night, we were awarded from BP, a direct award for the Tiber project, which follows the Kaskida project, which we had received earlier. So yes, several areas to be very excited about. There's a couple of other countries I haven't mentioned that are maybe even beyond that.

Well, I'm sorry, I skipped over Namibia for China. Namibia, we're actively tendering in Namibia today. There will be all reasons to believe that there'll be multiple projects in Namibia. So yes, and then even beyond that, there are some other countries that will potentially come into the offshore mix.

So where at one point, I think there was a perception that it was like limited in terms of the opportunity set, I would call the offshore opportunity rich as we sit here today.

Doug, on Brazil, in particular, we've been hearing some inbounds and concerns around maybe the longer-dated activity levels are under question, under review because of budget constraints. There were some news on platform support vessels being retendered. Is there anything that is that could potentially spill over? Are you hearing anything that would impact the way we think about Brazil today?

Brazil in specific?

Specifically, yes.

No, nothing in particular.

Nothing to highlight there?

No.

Cycle time reduction has been a very important focus area for you. You've talked about how that works with Subsea 2.0 as well. How far are we there? Like how much more do you think we can do in terms of the industry level? And how do you think about your role there?

Yes. Look, thank you for asking because I think it's an important takeaway from this discussion. Our order our orders for Subsea 2.0 -- Subsea 2.0 represent about over 50% of our orders today. It consumes about 1/3 to 40% of our manufacturing capacity today. So we're benefiting as it flows into orders and through execution. But those orders continue to grow beyond the 50%.

But when we talk about that, the original Subsea 2.0 was all about the seabed architecture. We often talk about subsea trees, but there's a whole city on the seabed supporting those subsea trees. But Subsea 2.0 was really about the seabed. After the merger and the creation of TechnipFMC, we now have the opportunity to look at the water column, which is umbilical risers and flow lines as well as the vessels and the installation process, which neither of those have been addressed by Subsea 2.0 as of this date. So that is extremely exciting for us.

So if you put that into rough terminology, I'm a hockey fan. So let's go with a hockey analogy. We're just finishing the first period. We're in the first period in our mission. So in other words, we're about 1/3 of the way there. There's about 2/3 of opportunity-rich data set within our own scope for us to now industrialize using the Subsea 2.0 model. It's why I remain convinced that we can continue to reduce cycle time in the offshore, which our customers benefit from improved project economics.

Doug, from that perspective alone, as you think about the other components, the order number that you've been talking about at $10 billion for '26, for instance, in the last few years, is there a way to think that, that that $10 billion number as a result of what you just said is very sustainable? Or is there a little bit more upside to that? How should we think about the order impact as you go beyond just the tree?

Yes, we just gave 2026 guidance. So I don't want to get too far ahead of myself. But look, we do believe it's sustainable, and I will say it, we do believe there's upside. So let's see how it plays out. I think the fact that it's been pretty steady around $10 billion, don't read -- it's a point in time kind of thing. I wouldn't read too much into that. We gave an objective -- or we gave guidance of $30 billion over 3 years. It happened to come pretty close to $10 billion, $10 billion, $10 billion, but it could have been $8 billion, $12 billion and $10 billion or any combination thereof. It just happened to be relatively stable. It's not a sign of the total market size. It's not a sign of any capacity constraints on our side or the supply chain side. It's just the way that it's actually materialized.

But from everything we can see today, the conversations we're having, the visibility that we have because we're not just designing the equipment and installing the equipment, we're back at the architect or the FEED or pre-FEED phase. So we're doing those projects in conjunction with our customers sometimes 2 years before they FID the project. So we have a lot of visibility out beyond the end of the decade, out beyond the end of the decade today, which is why we can say -- which is why I can say with a degree -- with a high degree of confidence that we believe that, that's a sustainable rate or greater.

Okay. On the margin side, Doug, I think throughout the year, we've spoken about various components that could add to the margins, whether it is increasing revenue contribution from Subsea 2.0 or there's internal optimization. Do you want to talk about what those components are, how we should think about margin expansion in general?

Sure. So look, internally, we believe as a company that we have not achieved optimal performance. And I know that probably is surprising to hear somebody sit up here and say that, but it's true. And I think we will never achieve optimal performance. And if we take that mindset to work every single day, 22,000 women and men, we will find opportunities. It may be hours, it may be days or it may be weeks to do a certain task more efficiently. But if everybody is pulling on the same end of that rope and saving hours, weeks or hours, days, weeks, it's a meaningful impact to the company.

So we benefit from this whole lean methodology that we've applied across the entire company. We don't look at it just as a manufacturing -- from the manufacturing processes, which is how most companies do. We've actually used it to change the culture of the company, and this is the success that Toyota has had with it in the past. We've been working really, really hard to take this and make this part of our culture, and we've achieved that.

So we now have this element of looking for savings, meaning efficiency gains, which results in savings, which results in margin expansion across the organization every single day with every single person performing the task that they're doing. It also allows us to grow the company without having to do consolidation, without having to do large-scale capital investments. It does wonderful things to your returns in terms of -- it shows up, obviously, in the ROIC of the company to be able to grow while maintaining a very stable discipline around capital expenditures and not requiring M&A for growth. This is what we've created. We're seeing the benefits of that today, but there's a lot more to come.

Doug, would you add anything incremental on the Subsea 2.0 adoption rate? I know that it's been increasing, and you've talked about the mix in orders versus mix in revenue. But are you seeing further adoption to the point where you could get to 100? Where are we today?

It's a fair question. And I have this debate internally within the organization. So let's start with the first part, and then we'll talk about the 100%. To me, one of the most reassuring or complementary things about Subsea 2.0 is we've never had a customer that went with Subsea 2.0 that ever went back. That says a lot. That says a lot. So once they adopt, it's very sticky. It's very sticky, which means direct awards to our company because we're the only ones with the Subsea 2.0. So that's been very rewarding, and it demonstrates that they see real value in the Subsea 2.0 architecture.

Where is there upside? Look, there's upside as we move these projects into the Life of Field services. There is a whole benefit of Subsea 2.0 to Life of Field. And when I say a benefit, I always think of my customer and ourselves. There's a benefit to the customer because the customer gets the leverage the same installation tolling assets and work over assets that they have to buy for their subsea equipment.

If they have Subsea 2.0 in multiple geographies, they can share the installation tolling. It's a benefit to them. It's a benefit to us in terms of our ability to be able to be more efficient and generate a higher return from those assets. So as an example, we'll see that benefit in our Life of Field services.

We have continued to see customers adopt Subsea 2.0 to where it's a very significant percentage now, approaching 100%. I don't know that we'll achieve 100%. And I don't know that, that's a bad thing because there will always be some nuances and some reasons to maintain some 1.0 capability or bespoke capability. But let me be clear, we will not allow that to disrupt the flow and the efficiency of Subsea 2.0. So if we retain 1.0 capability, it will be located to a specific line in a specific geographical plant. So we have Subsea 2.0 plants that we won't introduce 1.0 into because if we do that, it disrupts the flow and you lose all those efficiency gains or it disrupts temporarily those efficiency gains we talked about.

So if we maintain 1.0, and I think we will for some period of time, it will be isolated and contained, and it won't disrupt or dilute the progress we've made in Subsea 2.0.

That's very helpful, Doug. As we think about the $10 billion orders for '26, is there anything you can talk about in terms of the mix? I want to get to the Life of Field services as well because the service aspect also has unique growth drivers there, but maybe we start with the mix, if there's anything you can provide.

Sure. So look, at a high level, I think we'll continue to be pleasantly surprised, and I'm speaking to the community at the level of greenfield awards in 2026, much like we had in 2025, representing -- continuing to represent a significant portion of the overall awards. I think you'll start to see some incremental brownfield awards, and you'll start to see those in geographies that will -- that are relatively new in terms of the emerging market status that are actually now starting to look at brownfield opportunities as well as continue to look at greenfield opportunities. So you get that compounding effect. I think you'll start to see that in 2026, which will surprise some people.

And look, Life of Field services continues to be extremely important. It's an OEM model in our industry. We continue to grow our installed base because of the success that we've had, but also our installed base continues to age every day. And the more mature of the assets, the more inspection maintenance and repair that is required. And that is a very important element of our overall margin mix, meaning the subsea services business or the Life of Field services business. So continued growth there, and we would expect, as we are seeing on the rest of the subsea business, continued expansion in our profitability due to those internal efficiency gains.

Doug, on the services side alone, late, I know we were talking about this yesterday as well is that there's a lot of organic growth because of the installed base. Can you give us a sense of what that organic growth looks like over the next several years as you think about beyond the decade because you still have orders coming through? And is there a reason opportunity to do anything inorganic on that side of the services element alone?

So yes and yes. In terms of the first, what we have said is we expect services to grow in line with the overall segment growth, which, again, we've already put 2026 guidance out there, so that's public. There's reason to believe that there's potential upside to that, and that would be important to us. So that -- I think that's very -- we have a high degree of confidence there. That's kind of on the organic side.

On the inorganic side, we will look at things that could either improve our cycle time efficiency or potentially where we could create some incremental value for our customers in looking at the inspection, monitoring, repair of their subsea assets.

And an example of that would be historically -- and when I say historically, meaning including today, if you wanted to repair something subsea, there was only one way to do it. And that was to go out with a vessel or a rig, retrieve that asset, bring it back to the water -- to the surface of the water, put it on a supply vessel, send it back to the shore, bring it to the OEMs' site, wherever that may be in the world. It would be refurbished, repaired, whatever. It would be back on a vessel, it would go back. It would be lowered back by a rig or a vessel and reinstalled. That would lead to plus or minus 9 months of downtime.

So 9 months of lost production, that well is shut in. At that point, you put a BOP on the well and it's shut in with 0 production. We are now demonstrating that things that used to be done with that model can now be done in situ on the seabed with advanced robotics, allowing us to repair things in days versus plus or minus 9 months. So days of lost production versus plus or minus 9 months of lost production, huge value proposition for our customers. So that's where we talk about innovation and doing things differently. And this is very deepwater. Remember, when we say subsea, we're talking 1 to 2 miles deep in the ocean. So this is all with advanced robotics, advanced automation and control. And this is an area that is an expertise of our company, and we're looking now to use that in our subsea services business.

Doug, can you talk about the opportunities, both on the electric subsea infrastructure that we've spoken about before? I'm sure there's companies that are still adopting, still trying to figure out what that opportunity set could look like. So would love to hear there.

And then you've previously spoken about brownfield opportunities, the tiebacks that could basically increase the size of the footprint, the area, hugely cost efficient and breakevens for offshore gets impacted by that. Can you talk about what you're seeing on those 2 fronts?

Sure. So the -- most of the equipment today on the sea floor is controlled by hydraulics. So somewhere on top of the water on some vessel or platform, there's a hydraulic pump. You kick it on, you pump hydraulic fluid down to activate something that will turn something, i.e., an actuator to close a valve. It works. It's always worked. It's fairly reliable. The challenge you have is friction pressure because you're pumping that fluid through a very small, very high pressure, mostly [ in canal ] tube and I just said 1 to 2 miles down, that's a lot of friction pressure. So you're limited by how far of a distance you can go before the hydraulic pressure is offset or consumed by the friction pressure. So you're constantly fighting that battle.

What we know about electricity is it has very limited friction loss, and it can go a very long distance. So it just makes sense to use electric actuation versus hydraulic actuation where it's applicable.

So the industry has looked at this for a while. Where we're seeing the fastest adoption rate today is actually in greenhouse gas or CO2 or CCS applications. Where we were -- we received from BP, it's called the Northern Endurance partnership in the U.K., where they're taking CO2 that's captured onshore and taking it 145 kilometers offshore and injecting it for permanent storage and saline aquifers offshore.

The challenge was you can't push hydraulics 145 kilometers. So either you were going to have to come up to all these floating production platforms that were just going to be hydraulic pumps or booster pumps or you thought differently. So we attacked it from an all-electric application. We have tremendous amount of experience using electric actuation. So we applied that on this project, and this has enabled that project to remain everything on the sea floor, and we're just using electric actuation. So it's a full -- first full field all subsea electric actuation, and that's for a CCS project in the North Sea.

In terms of the brownfield, it's exciting because remember, I said you're limited by the distance you can go on the seabed by the distance you have to go through the water column. So again, move to electric actuation, you can move much further laterally, if you will, away from the landing point and go further and be able to tie back more assets to that host facility that already exists in a brownfield, the host facility exists. And you're just trying to tie back more wells to that to improve the level of production that's flowing through that asset and improve the return on that asset. All electric will enable that, which hydraulic has been limited in the past.

Doug, do you want to talk about your capital allocation priorities? How should we think about free cash flow, the use of CapEx, the use of cash? You're obviously building cash on the balance sheet, M&A outlook.

Sure. And I know we're going to run out of time. So thanks for giving me the opportunity. Look, we're really proud of the balance sheet that we have -- that has resulted from all of the actions that we've taken. We're investment grade by all 3 of the facilities, a pristine balance sheet. We're a net cash company, and we are in a position right now of material cash flow generation. We made a commitment and we distributed -- again, we got to get through the full year, but the commitment is 70% of that free cash flow will be distributed to our shareholders, principally in share buybacks as well as our dividend, and that's something we're very proud of, and we expect and we will continue to do.

In terms of the overall free cash flow generation, it's been robust, continues to be. No big M&A. Our strategy isn't evolved around M&A is not a necessity. So we would only do M&A if it was something that significantly reduced cycle time, further improving project economics and growing the market, which most of that we will do internally just within our own R&D budget. So no big M&A necessarily required.

And in terms of CapEx, we've been very disciplined of -- we said we'd spend between 3.5% and 4% -- 3.5% and 4.5%. We've been spending below the 3.5% and growing the company. The way you can do that is you have to do more with the same. It's this relentless pursuit of the reduction of cycle time. That also benefits your asset base. You can do more with the same amount of assets. I know it sounds simple, but this is not the way the industry has worked or much of the industry continues to work today, and it's something we continue to benefit from.

So our commitment remains the same. We also reduced debt this year. So again, gross debt is now at a very low level. There's nothing due for multiple years. So you should expect next year another strong free cash flow generation and another strong shareholder distribution as well next year.

Great. Doug, thank you so much for taking the time. Very helpful information.

Thank you very much.

Thank you.

Hi, everyone. I'm Marc Bianchi, U.S. oilfield services analyst here at TD Cowen. We're excited to be joined by Doug Pferdehirt from TechnipFMC -- Chairman and CEO of TechnipFMC. So thanks, Doug, for being here. I'll -- I guess, maybe not everybody is as familiar with what you guys do. So maybe give us like 1.5 minutes on what you do just to get us going.

Marc, I don't think I've ever given an overview in 1.5 minutes, so that's a challenge. But let me first start, Marc, by thanking you for allowing us to be here and for the quality of research that you do. Also to TD Cowen, to everybody here in attendance and for those joining via the webcast, thank you for your interest in our company. It's very humbling. Look, we looked at the industry back in 2012 to 2014, and we made a decision that we felt there needed to be a material change in the way the business was done offshore in order to ensure that our customers would have confidence again and that the capital flow would go from the U.S. unconventionals, which at the time was attracting a significant portion and a growing portion of the total capital expenditure back to offshore.

That was about bringing certainty back to these offshore developments. The challenge was always the certainty and the delivery of these very large and complex projects. So we knew we had a role to play that we had to materially change the way that we operated as a company. That led to us developing a configurable -- configurable architecture. So much like the auto industry, moving to where there were subcomponents that were pre-engineered, predesigned and were configurable based upon the customer need. So the customer experience was still, I'm getting something built for me as when you place your order for an automobile. But in reality, they're not, and we're not doing any engineering specific to your requirements. That's all been done upfront.

That in itself removes 9 to 12 months of detailed engineering -- and it also removes a great degree of uncertainty and allows us to ensure the delivery of this very complex architecture when as promised. Beyond that, we said, okay, this is good. This is important, but is there more that we could do? So we're not a company that focuses on consolidation. We're a company that focuses on integration. What can we do in the adjacent space that will create greater value towards our singular purpose, which is the relentless pursuit of the reduction of cycle time, again, making offshore projects more economical and with greater certainty of the outcome of the delivery of those projects. That led to a merger between FMC Technologies and Technip on the 17th of January 2017, a long time ago, almost a decade ago. And here we are today to where the market is largely -- we call that iEPCI, integrated engineering, procurement, construction, and installation.

On those projects, we're the architect, we're the builder, and we provide the life of field services contract. So we are literally engaged with the customer anywhere from 20 to 30 years. So it's a very intimate long-term relationship that we build with our customers. The success of these 2 things, moving the business to being integrated, which it was never in the past. So it used to be up to 14 different contracts, now a single contract with a single company and the Subsea 2.0 architecture, both unique to our company, have led us to where we are today to where our customers are rewarding us by recognizing that value because we're creating the value for them by the relentless pursuit of reduction of cycle time, improving their project returns. And they're recognizing that and rewarding us with now 80%, 80% of the business being direct awarded to our company in a market that's growing. It's a humbling and exciting position to be in, Marc.

Good overview, Doug. I think -- so this sort of plays into one of this ability to lower the cost and make offshore more competitive than it was a decade ago. And I think you have this view that we're not really going to be necessarily in cycles anymore because really the marginal barrel -- or the lowest cost barrel is offshore enabled in part by you. But can you just talk about maybe your world view of some of the other sources of supply and why you think offshore is really going to get the majority of the capital as we go forward?

No, it's a fair question. And also, I will acknowledge that the lowest cost barrel is in the Middle East. But you have to have economics and you have to have access. So the lowest cost barrels in the Middle East, but there's very limited access in terms of capital flows by other than the national oil companies involved into those regions or into those countries or kingdoms. So as a result of that, they have to go to the next best economics that has access and that's offshore. And it's really as fundamental as that. We saw this coming back in the third quarter of 2012 -- 2011, excuse me, 2021, we started talking about this. At the time, it seemed a little far-fetched, but you could see how that was setting up because at the same time, the economics in the U.S. unconventional were deteriorating. Plenty of access but deteriorating economics.

We knew with what we had done with Subsea 2.0 product, configurable product platform, we knew that what we did with the iEPCI and having this integrated model and all of this capability in-house that we could drive that cost curve down. So we had our own internal ambitions. And by doing so, we realized that we could improve the economics offshore again. Then what we had to deliver at the end of the day was certainty. That was the variable because our customers were still hesitant. Yes, we get it. We see it. We believe it, but you've got to deliver it. And I will tell you, we have yet to deliver an iEPCI 2.0 project that wasn't followed up by a direct award of subsequent projects. That's how successful it's been. It's given our customers the confidence back. They're prolific reservoirs offshore.

These are prolific reservoirs offshore. No fracking, no artificial lift. They flow naturally, very low decline rates, 4% to 6% per annum versus the unconventionals 30-plus percent over the first couple of years. So a very different setup in terms of your -- the size of the reserves, the ability to be able to -- the recoverable rates are much higher and the decline rates are much lower.

So very favorable economics. It's just about making sure that the business is done the way that it was intended to be done, meaning on time, on schedule, and that's what we're delivering today.

And there's really -- it's unique what you're doing, but another competitor is attempting to replicate what you're doing, but they're a ways behind. Maybe just talk about like the lead that you think you have...

Well, there's -- of those 2 components, let's break it down into the product architecture and the integrated model. So in terms of the product architecture, this was an extensive engineering effort. It took a -- we started this in 2013. We announced it in 2017 and started taking orders in 2019. I mean it's a huge body of work. There is no one else trying to do that today. There are companies talking about standardization, but standardization is not -- it's not configurable. I don't think configurization is the word. But there's a very distinct difference because we started focusing on standardization, too.

Standardization is simple, buy my piece of equipment. And a customer, just like you, it would be like the auto industry saying, buy my car. It's the only one I'm going to make, and this is what I want you to buy. No, you want to have choices. You want to have color choices, you want to have engine size choices, whatever it may be. You want to have some choices. That's what we mean by configurable. So that's -- so it's just a different approach. Clearly, I think the market's adoption of the configurable platform is indisputable. And we have a significant advantage. And now we're well over 50% of our orders are coming in with this 2.0 architecture. Now there will always be space for this kind of bespoke one-off kind of building and our competitor is kind of filling that void, but it is not somewhere where we aspire to participate. And then if you look at the integration side, look, there's a fork in the road when you come to -- from strategic decisions in terms of making M&A type transactions.

You can focus on consolidation or you can focus on integration. I will tell you, consolidation -- the outcome is more certain because you're just buying somebody who does what you do and then cutting cost and trying to get benefit from it through synergies, cost synergies. That's a well-known playbook. And integration is often less traveled of the 2 paths. And in our case, had never been done before. So look, it was not obvious. We chose that path, and our competitor has now chosen the path of consolidation. So I would say we're actually heading in 2 very different directions. And our clients see that and our clients recognize that. And there's space for both of us, but we have different strategies, and we're proud of what we've delivered.

Okay. You've said this, and we've had a few sessions together over the last couple of days, the relentless pursuit and reduction of cycle time, I think I've got it down now. Like talk to us about how far along you are on that journey and what it means for the business? What does it mean for margins? What does it mean for capacity? And what kind of advantage do you think it gives you?

So I've always been on the service side of the table. I started delivering newspapers before school and then many other service jobs throughout my career. So let me start with what's most important, which was what is the benefit to our customer. That's all that matters. And that's a thing. You have to focus on your client. You have to focus on creating success for your client. So the relentless pursuit of reduction of cycle time translated for our customer means higher project returns. And not only higher project returns, but higher project returns with certainty of the outcome. which is why they're spending more capital offshore, why they're exploring offshore again, why this is the big focus for them in their portfolio now that maybe it wasn't over the last 15, 20 years because of other distractions that had occurred in the global energy mix. So that's most important to me and keeps me aligned with my customers' interest.

Now we benefit as well. And how do we benefit? Because by focusing on the relentless pursuit of cycle time and having the 2.0 and the iEPCI where the competition doesn't, it creates just greater differentiation for us and aligns our outcome with the outcome of our clients. So people often use win-win. This truly is a win-win. Our clients are winning because they're getting improved project returns with greater certainty, and we're winning because they're willing to give us a greater portion of the economic value that we create. That's only fair. So both sides are feeling good about it and both sides are winning. Whereas if you're in a commodity business and you're just trying to increase day rates or you're trying to increase pricing, that's obviously counterproductive to your client relationship. Our client relationship is aligned. I mentioned earlier that we're the architect as well as the builder. So we are sitting there at the table working with them intimately to design the architecture to meet their economical hurdle rates 2 to 3 years in advance of that project actually becoming -- moving into the execution phase.

So we're aligned from the beginning. And this is why they have the confidence in us to, again, honor us by giving us 80% of their -- honor us by us receiving 80% of our business as a direct award, never going out to a competitive tender. So it was all about getting those aligned. Now maybe to further answer your question, Marc, is it over? Have we achieved -- we achieved that outcome? Well, yes, but only partially because we're only about 1/3 of the way through this journey. So we still have significant areas that we are convinced that we can reduce cycle time and improve the certainty of the outcome, hence, improving clients' project returns offshore, which will lead to greater value to us and to our shareholders at the same time.

So I'm sure this is a question on everybody's mind is like how do we translate that opportunity into margin upside or business throughput or something that I can put in a spreadsheet. How -- what do I do with that?

Well, look, let's just look at what's happened so far. I think the numbers speak for themselves, right? You've seen that incremental margins that we've been able to deliver. Again, I shy away from talking about it because it's more important for me to focus on my clients' returns and my clients' project returns. But yes, we benefit from it as well. But this isn't something that -- this isn't a concept that I'm trying to convince you of here today. This is the way we've been operating. Remember, January 17, 2017, we created TechnipFMC. November of 2017, we launched Subsea 2.0. So this has been going on for a while. 50% of our inbound in 2024 has been iEPCI or these integrated projects. We've said this year, Subsea 2.0 is well over 50% of our inbound. So this is happening today.

Our customers are realizing we are -- we have delivered iEPCI 2.0 projects multiple times for our customers today. So they're experiencing it already, and they're seeing that benefit. So you see what we've been able to deliver. We've already given 2026 guidance, which I think is probably unusual for most companies. We've already done it. We're a backlog company. We have significant visibility. And yes, it included more revenue and more margin. So I think you're seeing it build out. And we believe that as we continue to convert more of our backlog to this higher-value backlog, iEPCI and 2.0, both for our clients and for ourselves, we'll continue to be able to grow margin as a result of more of that flowing through our execution. And so you're building that sustainability that is not necessarily driven by external factors. It's because of the difficult decisions we made almost 10 years ago and realizing the benefit of those now in our results.

I think someone had asked the question recently about where can margins go? And I think you gave a really interesting answer like, I don't want to have a target and I don't want to give targets to my people because we get some other benefit from them thinking through how to do that. So maybe you could just talk a little bit more about that because there's some interesting organizational things that you guys are doing that I don't think comes out as often as it could.

Sure. And I know I wasn't going to get away with the prior answer, Marc. So I knew you're going to follow up, and that's a fair question. So look, we get asked that question a lot because there's obviously interest. What I have said, and I appreciate you saying it was an acceptable answer. In some ways, I could understand it. People may not be satisfied with it, but it's the truth, which is I don't know where the margins are going to go. And that doesn't mean I'm worried about them going down, let's be clear. But I don't know where they're going to go because, again, this is a new experience for us as well. But what I do know is that we have real tangible evidence that the cadence and the flow rate and our ability to be able to deliver these complex projects in shorter and shorter cycle times.

And we're not shaving days, we're shaving months and years off of a project on a consistent basis. And we know we're -- as I said earlier, we're only in the early innings or early -- I'm a hockey player. So we're only in the first period of a 3-period match here. I mean there's a lot left to be done. But look, me setting a target in this environment, I do think would be counterproductive because the organization where we have gone as an organization is dramatically different than where we were just 5 years ago. And everybody talks about transformations, and I get it. But we'd love for you to come and see how we operate today. It is a very different company. I had to change my behavior significantly. But as a result of that, you've truly empowered 22,000 women and men and the output from that is just tremendous.

Everybody is looking to shave a minute, an hour, a day in everything that they're doing. This is really lean. I mean, we have tried to model a lot after Toyota, who has been hugely successful in this area. They've been very supportive in the Lean Institute in helping us through this journey. And a lot of companies get lean through their manufacturing and then they stop. We've taken this through the entire organization, every function, every person, including myself, has had to transform their behavior in the way that they work to where we're all focused on the same thing, which is the output which is relentless pursuit of reduction of cycle time, i.e., improving our clients' results. And our clients see that. This is all about the clients being successful and then we're successful as a result of that.

So the cultural change within the company is dramatic. And yes, so maybe I'll pause there. But it's -- what I do know is that there's certainly more fuel in the tank. We have a higher quality backlog than what we're executing today because of what we're putting into it, more iEPCI, more 2.0, higher quality. All that will need to be executed. Today, it's another 1/3, not to be confused with the prior 1/3, but only about 1/3 of our manufacturing capacity is actually executing Subsea 2.0 work today, but yet 50% of the inbound is coming in at 2.0. So by definition, as that flows through manufacturing, that will go to 50%. So we should see a benefit from that. And again, I just want to keep repeating this because this is the key. It's not about our margin going up. It's about our clients' project returns improving. And as a result of that, our margin is going up. That's how you keep the relationship with your customers.

Yes. On the topic of lean, you -- I think this is what you were alluding to on the earnings call, where there's sort of an opportunity to start to leverage lean maybe further downstream into some of the development. Is there anything more you can say about that? And if there's a plan to say more in the future, like let us -- when should we be expecting to hear more from you about that?

Okay. So let's just go back quickly through the history of it. So 2013, we launched this concept of configurable architecture, started working with the Lean Institute on this. We were FMC Technologies at the time. So our scope was the seabed. FMC Technologies was everything that sat on the seabed, which, by the way, everybody talks about a subsea tree. It's far greater than a subsea tree. Everything is big, the size of this room, and it's a small city down there. So a lot of things are on the seabed. But the seabed needs to be reconnected to the surface. That's what led to some smart people in the company saying, well, maybe we should do an integrated approach, not do a consolidation, but do an integration. And that's the area that Technip played in, if you will, in the water column, that's called umbilical risers and flow lines. So we brought that into the portfolio.

We created the iEPCI, the integrated commercial model that we've talked about, again, about shortening cycle time, removing redundancy. But we've never really taken the opportunity yet to take all of that -- all those products and put those -- fully move those to be configurable, okay? Just because it takes a while. As I mentioned, 2013 and 2017 as we went public with the seabed. So you should expect that now that's the benefit of becoming one company. We couldn't have done that in a joint venture or an alliance because your interests are not aligned enough. So that's why we did the merger. And now we're looking at all of that other architecture, which there's a significant amount in the water column and remember, when we talk about water column in subsea and this stuff just gets me super excited, and I might not get everyone excited, but we're talking 1 to 2 miles deep, 1 to 2 miles of water before you get to the seabed.

So this stuff is pretty amazing. And down there where no man has ever been, all remote automation and control robotics. We have robots on the seabed working on stuff. You just can't go down there. And now we have the opportunity to take 2.0 and apply it to all of those -- that other part of the architecture. And we've been working on that, and we're making good progress, but that's an upside, and that's what I was referring to.

Okay. Great. Well, maybe to talk a little bit about kind of the market -- current market state, the outlook. So you've been -- you've guided to and have been delivering $10 billion of orders in Subsea per year. It's from an outsider, that's like a remarkably consistent number. Is there something that drives that? Is -- there's a certain amount of sales capacity to work through projects with customers, maybe there's the customers' capacity. Is there any reason that 10 is like a magical number? Or that's just maybe it's coincidence that we've seen 10 for 3 years?

So I'm just going to have a little fun, right? Better than 9, right? So -- but let's go back to how the 10 came to be because I think that's important. 2021, wouldn't have been as many people in the room and probably wouldn't have been as many people on the line. 2021 was a very different setup. There was a lot of skepticism. We're out there saying projects are there. We're talking to our clients. Capital is going to flow to the offshore again and a whole lot of doubt and a whole lot of skepticism. So in 2021, we put out a 3-year target.

And the target was over the next 3 years, we would achieve $30 billion. Now we did that with a lot of science behind it, but we gave a $30 billion target over 3 years, never intending that it was going to be $10, $10 bill, $10, $10 million. And by the way, it hasn't been. It's been $9.7 billion, $10.3 billion. But we weren't expecting it to be as consistent as it was because these are -- some of the projects we do are $1 billion, $1.5 billion projects, and they could fall on December 31 or they could fall on January 2, and you don't worry to do on an annual basis. It has just so happened to have been actually quite linear beyond what I would have expected. But we set a 3-year target of $30 million, which is how -- I think it's important to go back and realize that. We weren't saying it's going to be $10 million -- did I say $1 million?

Billion.

We didn't say it was going to be $10 billion per year every year for the next 3 years. We just said it was going to get to $30 billion. Now we said for 2026, we've already said we expect it to look like 2025, which will be the $10 billion range. So we do expect that again next year. The market size is growing. We've talked about that because of the capital flows going offshore again. We see exploration happening. That's going to drive more capital flows and more projects. So that market is going to grow. So is there the capacity to grow? Yes. But I think we're in a good spot right now with revenue growing, EBITDA growing, solid inbound, meaning backlog continuing to grow, I think, is a good place to...

Maybe we just got a few minutes left, and I have a couple I want to ask on cash flow before we get there. Just in terms of the frontier market opportunities that you're talking to customers about. So I think we all know, all right, Suriname, Namibia, there's maybe West Africa starts to come back, maybe there's Equatorial margin in Brazil. But like what are the next -- we know the Subsea opportunity slide. What's the next stuff? When we update the subsea opportunity slide a year from now, 2 years from now, what's going to be on there that isn't on there now, like geographically-wise, not like customer-wise or anything like...

And I know we're going to run out of time, but I got to step back for a minute. Imagine what Marc just said. What he just said was 4 countries that weren't on the map before from offshore production or from production period. In my career, there has never been a period of time where in a couple of years, you've added -- it's just profound. So I just want to be careful, oh, Suriname, Guyana, Namibia, Mozambique. Holy heck, this is amazing. This is truly amazing. And I think we're taking it for granted, not you, Marc. But I just want to make sure that we realize this is significant and the growth in Guyana, where we are honored and humbled to be partnered with ExxonMobil and have provided 100% of their infrastructure in the country.

Suriname, we will do the first project there, the GranMorgu project for TotalEnergies. We're very grateful for that. iEPCI 2.0. Mozambique, we're working for ENI in Mozambique today. Just -- it's profound. I mean don't understate Equatorial margin you even throw in there. Equatorial margin is potentially another massive development. Now this is in Brazil, which is already a large country, a large oil-producing country, but this could be another massive growth opportunity within Brazil. The Paleogene in the Gulf of Mexico, this is the 20,000 psi deeper horizon in the Gulf of -- I'm sorry, Gulf in the U.S. Gulf. I mean, this is dramatic and these are providing significant growth to the offshore that even without what are all those other countries that are potentially going to come online, just focus on those. Those are real. Those are material. Those are going to drive activity well beyond the end of the decade. Now to answer your question, I get interested in other countries in East Africa?

I won't be specific, but there's other areas in East Africa that could potentially share the same geological feature as Mozambique. I get excited about the Eastern Mediterranean. I think both the activities from Israel to Egypt, but now in between, that could also come on. You could add 2 to 3 new countries producing in the Eastern Med. I get interested in the southern part of Africa beyond Namibia, which is obviously very exciting, but beyond Namibia. We didn't mention Indonesia. Yes, it's been a long-term producing energy country. But now with the gas projects in Indonesia, that is growing quite rapidly. There's other areas that are probably further out. There's large gas reserves offshore Colombia. It's very deepwater, but it's certainly something technically we could accomplish for our customers. So yes, there's a lot more to be excited about. But realize what the setup that's there already is significant and material.

Excellent. All right. I'm going to squeeze one more in, and we're probably going to go over. You just had a buyback reauthorization. You've been consistently buying back a lot of stock. And I think your message before had been we're really focused on buying back the stock rather than raising the dividend. But as something occurs to me, it could be a signal to send to the market about the stability of the business if you raise the dividend. How do you think about the decision process between buyback and dividend?

No, no, it's a fair question. And look, it is one that we discuss often with our Board. And certainly, last quarter before we announced the increase of the buyback program. But let me be very clear. What we announced was a $2 billion buyback. That's a large portion of the outstanding shares of the company. So the reason I'm emphasizing that is I think that exudes confidence, right?

So it's not that a dividend would exude more confidence than a $2 billion buyback on top of what previously had been a much smaller buyback program. Look, we think it's a great investment. We look at -- just look at the numbers. Just look at the fundamental metrics of the company, it looks like it should be trading at a much higher multiple. If you do a blind test and put those numbers against any industrial company, you're going to get a very different result. We believe that. We believe the investment community is recognizing and acknowledging that. And therefore, we believe that's the best place to return the cash to our shareholders, and we are honored to be able to do so.

Awesome. I'll leave it there, Doug. Thanks a lot.

Hello, and thank you for standing by. My name is Regina, and I will be your conference operator today. At this time, I'd like to welcome everyone to the TechnipFMC Third Quarter 2025 Earnings Conference Call. [Operator Instructions]

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

Thank you, Regina. Good morning and good afternoon, and welcome to TechnipFMC's third quarter 2025 earnings conference call.

Our news release and financial statements issued earlier today 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 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 Pferdehirt, TechnipFMC's Chair and Chief Executive Officer.

Thank you, Matt. Good morning and good afternoon. Thank you for participating in our third quarter earnings call.

Total company revenue in the period was $2.6 billion, adjusted EBITDA was $531 million with a margin of 20.1% when excluding foreign exchange impacts. I am very proud of the continued strength in our execution and the delivery of another quarter of high-quality inbound. With total company orders of more than $2.6 billion in the period, 15 of the past 6 quarters have achieved a book-to-bill above 1.

We generated free cash flow of $448 million and distributed $271 million through dividends and share repurchases, continuing to deliver on our commitment to return a significant portion of free cash flow to shareholders. Subsea realized quarterly inbound orders of $2.4 billion. This commercial success is the cornerstone of our ability to deliver growth in both revenue and profitability.

In the quarter, we announced 4 awards driven by continued strength in South America. We received multiple flexible type contracts from Petrobras, which included the direct award of a high-pressure gas injection risers for pre-salt projects. We were also awarded a contract to supply subsea production systems to be deployed in an array of greenfield developments, brownfield expansions and asset revitalizations across Petrobras' extensive portfolio. In Guyana, we were awarded the Hammerhead project from Exxon Mobil, where we leveraged our in-country experience and solid track record for providing schedule certainty. This award represents the seventh greenfield development on the Stabroek Block and will utilize our Subsea 2.0 technology.

TechnipFMC has supplied all of the subsea production systems for ExxonMobil in Guyana, since the first contract award in 2017. Our commercial success year-to-date reinforces our confidence in delivering more than $10 billion of subsea orders in 2025 as well as achieving $30 billion of inbound over the last 3 years.

Beyond the current year, we believe that offshore projects will continue to receive an increasing share of capital investment. This change in spending allocation is due in part to the significant improvements made in developing the large, high-quality and prolific reservoirs found offshore. These strong attributes were always known and the resource quality was always there, but cost overruns and schedule delays in the past would ultimately challenge project economics. In today's offshore market, much has changed, driven by a number of factors, including improvements in the quality and interpretation of seismic data, shortened delivery times for large production infrastructure, significant reductions in the time required for drilling and completion activities and as reflected in our inbound awards, the introduction of new commercial models and innovative technologies.

At TechnipFMC, we wake up every day with a single purpose, the relentless pursuit of cycle time reduction. This mindset led to the development of our pre-engineered configure-to-order product platform, Subsea 2.0 as well as the creation of the industry's only fully integrated execution model, iEPCI. These innovations provide the elements to shorten cycle times and improve project returns. But even more importantly, to help provide our customers with greater schedule certainty in our project execution. It is this combination of higher economic returns and greater project certainty that is providing sustainability to current activity levels, underpinning our outlook and securing $10 billion of Subsea inbound in 2026 and our confidence that activity will remain strong through the end of the decade.

In closing, the continued strength in our Subsea inbound orders reflects the confidence our customers have today and our ability to successfully execute their projects on time and on budget. This is making the author resurgence more durable as evidenced by the shift in spending to these markets. TechnipFMC is also driving this change in behavior. With iEPCI and Subsea 2.0, both having a profound impact on investment decisions by derisking and accelerating subsea projects. The success of these unique offerings has also contributed to the notable increase in the level of direct awards to our company.

With greater project certainty, we now see the execution phase of subsea developments as an opportunity to further leverage lean operating principles. In doing so, we can learn, refine and enhance our own processes, driving a culture of continuous improvement to further shorten cycle times and improve project returns. While focusing on the customer is always a top priority, we also believe that our shareholders should share in our success. Yesterday, we announced our Board of Directors authorized additional share repurchases of up to $2 billion. This significant increase to our share authorization exemplifies our confidence in the outlook as well as our commitment to maximize shareholder value.

I will now turn the call over to Alf to discuss our financial results.

Thanks, Doug.

Inbound in the quarter was $.6 billion, driven by $2.4 billion of subsea orders. Total company backlog ended the period at $16.8 billion. Revenue in the quarter was $2.6 billion. Adjusted EBITDA was $531 million when excluding a foreign exchange loss of $12 million.

Turning to segment results. In Subsea, revenue of $2.3 billion increased 5% versus the second quarter. The sequential improvement was largely driven by increased project activity, particularly iEPCI projects in Africa, Australia and the Americas. This was partially offset by reduced project activity in Norway. Adjusted EBITDA was $506 million, up 5% sequentially due to higher project activity. Adjusted EBITDA margin was 21.8%.

In Surface Technologies, revenue was $328 million, an increase of 3% from the second quarter. The sequential increase was primarily driven by higher activity in the North Sea and Asia Pacific, partially offset by lower activity in North America. Adjusted EBITDA was $54 million, an increase of 3% sequentially due to higher activity in international markets. Adjusted EBITDA margin was 16.4%, in line with the second quarter results.

Turning to corporate and other items in the period. Corporate expense was $28 million. Net interest expense was $11 million and tax expense in the quarter was $76 million. Cash flow from operating activities was $525 million and capital expenditures were $77 million. This resulted in free cash flow of $448 million. We repurchased $250 million of stock in the third quarter. When including $20 million of dividends, total shareholder distributions were $271 million. We have also increased our share repurchase authorization by an additional $2 billion, providing us with $2.3 billion of current authorization. Since the time of our initial authorization in 2022, we have distributed more than $1.6 billion through buybacks and dividends, representing nearly 60% of free cash flow generated over the period.

During the quarter, we reduced debt by $258 million including early repayment of the 6.5% senior notes maturing in February 2026. We ended the period with $438 million of gross debt, largely comprised of private placement notes that extend out to 2033, with interest rates of 4% and below. Cash and cash equivalents was $877 million. Our net cash position increased to $439 million.

Moving to our guidance. For Subsea, we expect seasonal impacts to our fourth quarter results, with revenue declining mid-single digits sequentially. Adjusted EBITDA margin is expected to decline approximately 300 basis points to 18.8%. For Surface Technologies, we anticipate revenue to decline low single digits sequentially, with an adjusted EBITDA margin similar to the 16.4% reported in the third quarter. Lastly, we expect corporate expense to approximate $35 million.

Moving to our full year outlook. I'm going to highlight a few items. Most notably, the updates we have made to our guidance ranges. For Surface Technologies, we now expect adjusted EBITDA margin to be in the range of 16% to 16.5%, above our prior full year view. And for total company, we are increasing our guidance for adjusted EBITDA by $30 million, which we now expect to approximate $1.83 billion for the full year when excluding foreign exchange. Lastly with the continued strength in our cash conversion, we are also increasing free cash flow guidance for the year to a range of $1.3 billion to $1.45 billion. All other guidance items for the current year remains same.

Before I move to my closing remarks, I want to recognize the tremendous progress the team has accomplished so far. The consistency in execution and further adoption of lean operating principles make us well positioned for continued improvement in most everything we do. Additionally, our commercial differentiation and the relative stability of offshore markets give us unique visibility, allowing us to provide an early view for Subsea for the upcoming year.

For 2026, we are guiding Subsea revenue to a range of $9.1 billion to $9.5 billion with adjusted EBITDA margin in the range of 20.5% to 22%. We will provide the remainder of our 2026 financial guidance with our fourth quarter earnings.

In closing, the continued momentum in operational performance drove another solid quarter for TechnipFMC. The strong execution was also reflected in robust free cash flow generation, leading us to increase our full year expectation to $1.375 billion at the midpoint of the guidance range. We are on pace to return more than 70% of free cash flow to shareholders in 2025 through dividends and share buybacks. And with our increased free cash flow guidance, shareholder distributions now have the potential to double versus the prior year. Yet even with this substantial increase in distributions, we have maintained the flexibility to further strengthen our balance sheet by reducing gross debt almost $450 million since the beginning of the year, including the opportunistic prepayment of our highest cost debt.

And finally, as we look further ahead to 2026, we have provided our outlook for Subsea, which at the midpoint of the guidance implies double-digit growth in adjusted EBITDA. Importantly, this level of EBITDA growth in Subsea is essentially double the anticipated growth in revenue, further expanding margins, improving returns while providing strong support for robust shareholder distributions.

Operator, you may now open the line for questions.

[Operator Instructions] Our first question will come from the line of Scott Gruber with Citigroup.

I wanted to start on the share repurchase authorization. It's going to be another good year of free cash this year, strong returns to shareholders above 70%. With the increase in the repurchase authorization and what should be a strong free cash year next year, how are you guys thinking about the right level of cash return in '26?

Sure, Scott. So obviously, we are very pleased with the year we've had with free cash flow generation this year, really supported by our strong commercial and operational execution that we had all year. This execution is foundational because the operational delivery uncertainty around that is really leading to the consistent achievement of milestones that then trigger billings and associated cash collections. So that's really, again, the fundamental strength in the cash flow conversion out of EBITDA clearly has increased significantly this year. However, when you exclude maybe working capital benefits and a few onetime benefits that we have seen in our free cash flow conversion from EBITDA may not be able to stay at that level. But if you think about what we have said historically, we said that we're going to be around 50% of free cash flow conversion from EBITDA, and we think we're now approaching more like 55% when you're normalizing for working capital to a more neutral position.

That's great. And how to think about the kind of level of return to shareholders from the free cash flow for next year kind of what's the framework you guys are thinking about?

Yes. So we are just recommitting that we will have at least 70% of free cash flow returned to shareholders. So that's -- we will continue at that level at the same level as we've had in '25.

Our next question will come from the line of Victoria McCulloch with RBC.

Just on the Subsea award intake, when we were speaking last quarter, you mentioned that there were some awards that haven't been announced to the market that we would see in the coming weeks. I think there was 1 from Equinor in July. Has there been anything that possibly still yet to be announced from of the order intake. Certainly, it seems your to the order intake is obviously very strong and running ahead for of others in the market. It's very strong by TechnipFMC. And then as a follow-up, not totally linked, what are your working capital expectations for this year within the new free cash flow guidance?

Sure. Thank you for the question, and happy to clarify. First of all, thank you for pointing out another solid quarter of inbound. We are differentiated in that. And I think that's very much a result of what we've done to create the company that we have, and it shows up in the level of direct awards it comes to our company. So in other words, the total available market that's accessible by the rest is shrinking every day as our direct awards continue to increase. So if you think about it that way, that's what gives us the confidence, the reassurance and the ability to continue to outperform. In terms of those specific, the comment around potential future announcements, there are actually still more to come. That really is governed by our clients. It typically has to do with their conversations with the local governments or their partners. And when they give us the green light, then we go ahead and make those announcements. But nothing -- there's no surprises there. There's no -- it's just a normal part of the process. It's struck out a little bit longer than we had anticipated when I made that comment. But again, thank you for pointing out the strength and resiliency of our outlook and our ability to win and secure the highest quality projects, realizing that we are being very selective in what we focus on.

Yes. And this is Alf. Regarding the free cash flow and the working capital assumptions. As you clearly point out, we have had a very exceptional year this year and a very strong year in terms of working capital performance. So whatever you can kind of gauge from the year-to-date numbers now is kind of one way to see the upside this year. When we guide for going forward, we will typically put ourselves with a neutral position. That's the right starting point.

Our next question comes from the line of David Anderson with Barclays.

I was hoping you could unpack the '26 Subsea guide a little bit for us in relation to kind of what I'm hearing from the rest of the market. Recognizing the midpoint of the guide, the revenue guide on Subsea is in line of consensus. I'm assuming the service component is up roughly cut 10%, like we've been seeing in the past years. So if as backlog conversion looks pretty steady for next year. We keep hearing about offshore picking up the late '26 building into I'm just curious if that's a trend that you think should also play out in your Subsea revenue. You mentioned shortened cycle times. I guess does that imply backlog conversion should start to accelerate in the second half of next year? And does Subsea 2.0 convert faster in the mix?

Sure, Dave. I think you dropped off there at the end. You might have to bring me back. There were quite a few a few things packed in there, year back, Dave. So if I don't catch everything, just you can ask me a follow-up. So first of all, thank you for asking us about 2026. I think we're the only ones talking about 2026, to be very clear, which again says a lot about who we are as a company, the unique visibility that we have, our position within the market and the confidence that our clients have in us to be able to award us projects far earlier than they have done historically or that they would do with the competition. So again, it's a privilege for us to be able to talk about 2026. When you -- as you said, as we kind of unpack that guidance, you're right, backlog coverage is strong. And it's not just the quantity of backlog coverage, it's the quantity of backlog coverage, and that was both in my prepared remarks as well as in Alf's, it's that ability to have confidence in increasing not just revenue, but also margin and margin at a faster rate than revenue growth. So this isn't just about volume. This is about higher-quality inbound and just, quite frankly, exemplary execution, which I'm extremely proud of our team and all of our employees for what they've been able to deliver. So those things set us up very well and give us the confidence to be able to go out now and no one else is talking about 2026, and we're able to go out with guidance for 2026, with a high level of confidence that we will be able to achieve that. You asked a question about Subsea services and kind of its growth rate, like in 2025, I would think of it as in line with the growth of the overall business. So in other words, we gave you the revenue forecast. So you can look at that top line growth and reflect something similar for subsea services. In terms of cycle time reduction and how that helps the conversion from backlog, indeed, it does, and that's a big part of the secret sauce is in terms of our ability to grow, whilst retaining a modest CapEx investment, meaning we don't have to invest to grow. We decided to do more with less. So we're not about building and spending capital and adding assets. The smart way to do it is to do more with less, which quite simply shows up in returns have not been achievable historically that we are demonstrating, and we'll continue to demonstrate as we go forward. So that's -- now we're not -- everything is tied to that accelerated cycle time, still the offshore installation side where there's work to be done. And it's an area we're focusing on how we can make that as efficient as we have the configured order Subsea 2.0 product architecture. And there's not everything in the Subsea 2.0, not every of our product architecture has achieved the level of Subsea 2.0 if you will, customization. So there's a lot of upside here left in the company, and those are all of the things that we're focusing on that we'll benefit from as we go forward. If I didn't cover everything you had hoped, please feel free to follow up.

Pretty close, pretty close. Let's hope I don't drop out here. So my second question is just about the Subsea margin guide for next year. What percentage of revenue are you expecting to be Subsea 2.0? And can you tell us how much -- what percentage of the inbound year-to-date has been Subsea 2.0?

Sure. So I think the easier way to think about it and maybe how it creates leverage for the company, is how much of it is actually flowing through the facilities. So we are right now -- let's say, when we exit 2025, exit this year, we'll be approaching about 40% on of our capacity, we'll be working on Subsea 2.0. Now the inbound levels of Subsea 2.0 have exceeded the 50% mark and continue to grow, and we would expect Subsea 2.0 orders to grow as a percentage of total orders also next year as well as iEPCI orders as a percent of our total orders will grow substantially. So these are big, big leverages -- these create a lot of leverage for us as we continue to move forward in ensuring that we continue to grow, expand our margin, increase our leverage and drive returns.

Our next question comes from the line of Arun Jayaram with JPMorgan Securities.

My first question is regarding your 2026 Subsea guidance. Doug, at the midpoint of the guide, it implies 175 basis point improvement in margins. I was wondering if you could help us understand how you think about the drivers of the margin expansion between Subsea 2.0 mix -- Subsea services mix and maybe pricing improvement?

Sure, and good morning, Arun. So clearly, all of those factor in. I'm going to really focus on the first 2 because to me, those are the ones that are sustainable. I think too many companies for too long, have just focused on the last one, and that is never a long-term strategy. So we have redesigned our company. We changed our operating model to create that leverage that we can have that sustainable leverage regardless of the level of activity that there is in the marketplace. So when you think about it, there's really the 3 components. There's -- we do have some legacy backlog, some legacy projects still in our backlog, and those will be working off. And we're getting down now to below the 10% mark of what is left in our backlog. So there'll be some of that remaining in 2026. And then -- but there will also be more Subsea 2.0, as I just responded today and more iEPCI execution going through. All of that is -- those are the things that are like, let's say, very tangible. But what you have to keep in mind is the entire organization, it's not just the manufacturing part of the organization. The entire organization is on this industrialization journey, and it's real, it's real. And many of you have had the opportunity to visit and see how we operate today versus how we used to operate and the rest of the industry still operates, and it's very different. And it creates that what we call solidification, standardization and industrialization. And it goes across everything that we do, including the functions and every activity we have in the company. This is what creates that leverage. So when you get over 20,000 women and men working together every single day, finding those incremental improvements and being rewarded and celebrating those successes, that creates that momentum that gives us just a high level of confidence in room that we're going to be able to continue to accelerate and grow the performance of the company.

Great. Maybe 1 for Alf. Your net cash position has grown to just under the $500 million, I think it's like $439 million. You highlighted plans to return at least 70% of free cash flow. I just wanted to talk about what you think about the balance sheet and future uses of free cash flow because you have a very underlevered balance sheet. And I guess the ultimate question is could we see you returning essentially all of your free cash flow, just given how strong the balance sheet sits today.

Thanks, Arun. Thanks for the question. I think it's well placed. Yes, for sure. I mean we have taken care of a lot of things on the balance sheet, pointed out in my prepared remarks, $450 million of reduction of debt this year in addition to delivering on our commitment to at least 70% to shareholders. This debt reduction really reflects more than 50% of debt reduction since the beginning of the year. And clearly, our balance sheet needless to say, is just in great shape. We don't see any major change to our capital allocation, meaning we intend to continue to be a capital-light company. We have guided in the past that we will have CapEx in the range of 3.5% to 4.5%, and we continue to intend to stay at the low end of that range. So given also that we have taken care of most of our debt obligation, and we have really -- we like the maturities that we have out there for the rest of our debt, and we really don't see work in the debt structure significantly at this point. So it certainly leaves opportunity to -- when we say at least 70%, we clearly are focused on minimum that amount, but any excess cash, clearly, shareholder distributions will be one of the areas where we go to.

Our next question comes from the line of Derek Podhaizer with Piper Sandler.

Just to kind of keep going on Dave and Arun's comments about just the catalyst within the backlog improvement and the margin outlook. You talk about the industrialization, you have the Subsea 2.0. But Doug, can you maybe talk to us about what 2.0 could mean for the surf side or the installation side of things? Just thinking about those continued catalysts as we work towards the year, just the continued improvement of the business.

Sure, good morning, Derek. I don't want to say too much, but I think there is a significant opportunity to further industrialize the full iEPCI scope. So remember, back in history, we were running them in parallel. We were working on the Subsea 2.0 configure to order for the SPS or the subsea equipment portion of the -- of our activity. And then as a result of the merger, we now have the ability as a single entity, and you cannot do this if you are not a single entity because it has, let's say, conflicting behaviors between a traditional surf company and a traditional equipment provider. So as a single entity, now for 8 years. It's been 8 years ago that we actually merged. It gives us the opportunity to expand that across the whole portfolio. So I am sure you all will have an opportunity to hear much more about that in the future. But I'm going to be a little bit quiet today, which I know is not my normal behavior, but there is a -- it's an incredible opportunity, but I am going to stop there. We're working hard at it.

Got it. Fair enough. I appreciate that. Second on the subsea opportunities list, it's pretty noticeable and evident that scope of over $1 billion is meaningfully increasing really since the middle. Could you talk about the drivers behind that? I'm assuming the certainty that you guys bring to the table. But where could this ultimately go from a project scope perspective as we continue to see that wedge just increase over time?

Thank you. I didn't think of it as a wedge, but I'll take that. It's certainly been an ever-increasing wedge. And we've talked a lot about that, including the prepared remarks and that's really being driven by the fact that the best reservoirs are offshore, at least the best reservoirs that are accessible to the marketplace. So the capital is going to flow in that direction. It was always -- there was always some hesitation by our customers in the past, again, because of the unpredictability of the execution of offshore projects. What we have brought back to the industry, we've given our customers their mojo back, we have our mojo, and it's simply a fact of being -- performing well every single day, giving our client confidence by providing certainty. We have to reduce cycle time every single day. whilst providing certainty. If we can do that, and we will do that, we have done that, and we'll continue to do that. That will give our customers great -- ever greater confidence to invest more and more of their capital allocation to the offshore. It just makes economic sense. The breakevens of the projects, the returns on the projects the reserve base of very minimal decline rates compared to other areas that they can invest in. It just makes sense. So look, the opportunity list continues to strengthen. As you pointed out, Interestingly, the 3 new projects that are on the list are all gas. I wouldn't overreact to that. I think -- but I do think there is something to be said about that. I do think gas is a bigger portion of the future of the hydrocarbon mix in particular, in the offshore. And again, a lot of these offshore gas as LNG. So we often think about LNG in a terrestrial way because LNG is the physical thing that you see is often on the key side. But a lot of the supply of that gas is coming from offshore gas, particularly outside of the U.S. So anyways, it's an interesting combination of projects that were added, but here's something -- maybe here's just a little teaser for you. The livid you don't get to see, which is our proprietary opportunity list, which drives our direct awards, that list has grown at an even faster rate.

Our next question comes from the line of Ati Modak with Goldman Sachs.

Can you talk directionally about the outlook for Surface Technologies for '26 given the Saudi activity potential? And then you also raised the margin guide for '25. So maybe help us understand the drivers there as well

Sure. So we talked a bit about it last quarter. I'm super proud of the team. They've taken the necessary actions to ensure that they can provide adequate returns to the company and to our shareholders. We've focused where and what we do. And as a result of that, they're able to deliver quite exceptional results and actually improving results when others in this realm, I think, are going the other direction. So I will tell you the outlook is less certain. It is why we did not include that in our early guidance. We were able to for Subsea, but the Surface or the Onshore business remains much less predictable. Certainly, the -- historically, the level of continuity in our international business or non-North America business, it's much more predictable. It has less less downside swings to it, if you will. But it's still very early. And we are talking to our clients now. We're working through that on a budgetary work. There they're doing it themselves. So there's not a lot of information to be exchanged. But we positioned ourselves with the right customers, in the right basins, providing the right technology. And we've had very good success with our iComplete offering, which is the digitalization of the entire frac pad, not just the [indiscernible] digitalizing their work or the wireline company digitalizing their work, but we put an overlay interface, where we can control the whole well site, allowing record performance in terms of continuous pumping. So we're going to continue to bring those high-end solutions as well as continue to benefit from the in-country investments that we've made in local manufacturing in the Middle East, where we are very well positioned with those clients, and we'll continue to succeed on a relative basis because of those investments that we've made. So just a little less clear at this point, and I think we will provide that guidance along with our -- the full company guidance and -- with our Q4 results as we do historically. It's just a different business than our Subsea business.

Got it. That's helpful. And then can you give us an update on the electric Subsea infrastructure opportunity, where that stands as of now, I've seen some announcements from some of your peers earlier this year as well. Just wondering if that is starting to become a little bit more topical and what that could mean in terms of orders and margins for you?

Sure. It's progressing. What you've seen is to greenfield, all-electric awards. TechnipFMC received the first-ever All-Electric Subsea award and that was for the BP Northern Endurance partnership project we announced a few quarters ago. And then more recently, there was an award in the North Sea. We have said this, and I'll repeat it. I think the level of transition in terms of greenfield developments, to all-electric are not going to be as strong as I originally had anticipated. But there are 3 areas that are most definitely going to benefit from all-electric. And the third one being actually very, very interesting and very new. So those 3 areas are carbon capture and storage. We believe they will go -- they have gone all electric, and we'll continue to go all electric. So all of those opportunities that we're working on or we have secured are based on an all-electric infrastructure. And we have the industry's only certified all-electric CO2 injection tree, and that's important. The second area is in the area of brownfield tiebacks. We've talked about this before. It increases the radius from the host facility by about 4x and potentially even greater than that. And that has a lot of implications and positive implications in terms of customers being able to tie back to existing infrastructure, very low -- at a very low breakeven or very high returns. It helps us not only in the fact that we have the old electric solution, but we have other solutions like flexible pipe and subsea processing that all kind of come together to create that opportunity. And then the third area is where we're actually now able to retrofit hydraulic trees with electric actuation, if hydraulic actuation was to be deteriorating, there's always redundancy, so it doesn't fail. I don't want to say -- I don't want to put the wrong impression in your mind, but when it starts to deteriorate its performance over time, the customer would have to retrieve that tree, bring it back to the surface, take it back to the shore and retrofit, reinstalling, that is certainly months and can be quarters before that production is put back online. We have developed a novel solution to be able to go into a -- in situ on the C4 with the use of remote-operated vehicles and swap out hydraulic actuation controller for electric actuation. It is really interesting. And obviously, you don't lose that multiple months, multiple quarters of production. So it has a lot of upside for our clients, too. So I just think the original focus of electric as well, all new projects will go all-electric. I just don't think that's the case anymore, but we are finding by having invested and developed the technology, we're finding these other applications that could be quite exciting as well.

Our next question will come from the line of Sebastian Erskine with Rothschild.

Can you hear me now?

Yes, we can.

The first one, just a bolt-on, it's a very strong year for TechnipFMC on order intake. But I think a theme that has emerged perhaps is that some operators have kind of chosen a bit, they're going to slow walk deepwater FIDs. Some competitors have called Sub-Saharan Africa is a good example of that. And I also saw an estimate that was putting company tree awards down mid-teens percentage year-over-year in '25. So it would be great to kind of get your perspective on how the cycles evolve year-to-date versus your expectations at the beginning of the year? And I guess, looking forward, perhaps, what are the specific key basins that are going to drive '26 for you?

Sure. So look, I just have to be candid. We're not experiencing that. And I think that's clear. I mean, 3 years ago, we called the market and we said that the market was going to be resilient. We were going to be able to secure $30 billion worth of awards over a 3-year period, and we're well on track to do that. So -- and as far as our expectations for this year, they're right in line with original expectations, which is we said would be in that $10 billion range. And now we're saying we'll be more than $10 billion. So I'm not sure what others are experiencing, but our results, I think, speak for themselves. Now let me maybe explain why. Remember, 80% of our business is direct awarded to our company never goes out to competitive tender. So just think about what that does to the total available market. The total available market that's left is very small compared to what we have privileged access to because of the trust and the confidence that customers have in us, our unique offering and our ability to be able to reduce cycle time, improve their project returns, hence leading to those direct awards. And that's why when I say that proprietary data set that we work on our opportunity set that we're working on, which is not on our public list. Even though that public list is growing, those other projects are are only accessible by our company. And keep in mind, we are at the table very early because these are direct awards. We are doing the concept study. We're doing the pre-FEED study. We're doing the FEED study, and we're going straight into an iEPCI 2.0 execution. So I guess we just have greater visibility.

Really appreciate that. And a follow-up on that. I mean, looking at your backlog at a very large level, I'd like to get your perspective on kind of resourcing to execute that level of work. And I read somewhere that had increased staffing at your manufacturing facilities in Brazil, Malaysia and the U.K. by some 20% to 40% in 2024 versus a kind of base of '21, so post-pandemic. Are you happy with the resourcing at the moment? I guess looking at it, given the tightness is, are there some concerns in the industry around potential bottlenecks or capacity constraints? And how are you positioning to execute that work.

Well, first of all, I can't confirm those numbers. Those are new numbers to me, but I'm not sure where they came from or what you heard, but let me just answer the question more broadly. First and foremost, and this is a commitment I make to every single customer, we do not take on any work that we can't execute. And so look, we know bid work. I mean there's work out there with our competitors, we're now bidding it. It's very clear if it doesn't meet our threshold in terms of the quality of the work or the type of execution that is expected or where it is expected or the currency in which we're going to be paid or the risk that we're asked to take on, and we will just now bid that work. So first of all, it's -- what we inbound, we have a commitment to deliver and it's important, deliver on time, on budget. I mean the reason why we get repeat awards is only because we're performing at a very high level. We have never not gotten a repeat award. We often replace the competition. I mean it is a very different scenario in terms of how we are operating versus how we used to operate, which is all the industry -- the rest of the industry still operates. So I really can't say much more than that other than we just have a different operating model. It took a lot to get here. Thankfully, we did it 10 years ago. And so now we're singularly focused on execution. We're not focused on anything else than delivering to our clients and meeting their expectations. So long answer to your question is we are very confident in our staffing levels. We're very confident in the resource levels. The whole strategy of the company and reducing cycle time is the ability to do more with the same. So it's not about staffing levels. It's about being more efficient.

Our next question will come from the line of Marc Bianchi with TD Cowen.

I wanted to start with some more questions on services. So Doug, can you remind us what the mix of services between like installation versus servicing your installed base is in the business like roughly? And the reason I ask is the the comments earlier about kind of '26 and a service growth rate looking like the overall subsea, I would have thought that services could be doing a better growth rate than sort of decelerating, so maybe you could unpack that a little bit for us? And then the second part of it is like if you look longer term, is there anything we should be thinking about how the integrated awards that you've taken in the past several years affect the servicing opportunity and then anything with like the vintaging of your installed base as we come up on maybe some anniversaries of more service opportunity?

Sure. And thanks, Mark, for bringing us back to service, its important. The only thing I would disagree with in your statement, I think you said deceleration. There certainly hasn't been a deceleration. Look, you do get a compounding effect. The larger the installed base, the more opportunity set there is, and certainly, the higher the volume, the longer the tail and the more opportunities you have. So let's talk a little bit about the mix of services. So yes, you have the original installation activity. And then you have all of the activity around the inspection, maintenance and repair of the installed infrastructure. And then you have another bucket that's all around refurbishment of equipment. And then you have that final bucket that's all around intervention services. And what is very beneficial, not just driven by iEPCI, but just probably driven by the market presence that we have is that whenever the wellbore needs to be intervened on or in which happens at a much higher frequency than the equipment because the equipment is built to last for 25 to 35 years. We come out -- we provide the services associated with giving the client assets to the wellbore. So that's what I mean by that intermittent work. So -- and wellbores can fail within the first year, wellbores can fail within 5 years. The more intelligence and all that, that are put in the wellbores, it's just more opportunities for things to potentially need to be replaced or repaired, which means we are involved. So look, there is no doubt that we have -- the Subsea Services business has grown substantially. We I gave some prior guidance for this year at about $1.8 billion. As you know, that's almost double where we were not too long ago. So yes, very proud of our Subsea Services business. It is a business that's going to -- it's not just the quality of the earnings associated with it, but it's having that leverage in that footprint and that sustainability and continuity. So perhaps my remark about it being growing in line with the core business, which is also growing at a good rate, maybe made it seem understated, but that wasn't the intent.

Got it, great. And my second question is just around fourth quarter. And if I sort of look at what the revenue guide is here for Subsea, it would look like you're highly covered with backlog like more than usual. But I think there were some conversations during the quarter about some extra vessel downtime beyond normal seasonality. Maybe you could just unpack a little bit what's going on there, and maybe how we should think about how that progresses through the -- into the first quarter?

Sure, Mark, Alf here. So yes, you are right. First of all, we are well covered on the backlog. We did have a strong Q3, and -- but we are, as you point out, guiding Q4 down versus Q3. And that revenue is declining largely through the utilization of vessels. We have this seasonal activity levels pretty much every year, where we see that decline, particularly in the North Sea. But overall, it's affecting our ability to go offshore and generate revenue. So that's there. And then we talked about the revenue -- the associated EBITDA decline. However, when you look at the big picture of where our guidance was in terms of revenue, we were at $8.6 billion of midpoint. And if you kind of take this all together between the Q3 and the Q4 performance, you'll see that there is an uptick and an expectation that we will be above midpoint for the full year when it's all said and done.

Our next question comes from the line of Saurabh Pant with Bank of America.

Doug, you gave some good color on 2026, and you gave that color early, a lot of good questions, but your revenue is still below the orders you have been booking for several years now, right? So there should be upside going forward. What I want to focus on bags as you enter deeper into the execution phase of this backlog, right? What are you focused on? What are you looking at, especially among wondering both the installation, the side of things. the vessel side of the market, especially given some consolidation out there. Just maybe talk to the execution side of things as you execute on the backlog and orders you're booking.

Sure. I think the biggest thing to focus on, and we've talked about this previously on calls was just if leads the quality of the inbound, which obviously goes into the backlog, which then has to be executed. And what we know is we know there's more iEPCI, we know there's more 2.0, and that creates a significant level of confidence in our ability to be able to execute those projects. I said earlier, it came out on a couple of the earlier questions. it's all about relentless pursuit of the reduction of cycle time. Sure. That makes sense. It means our customers get a higher project return. It means they're happy for us to share a greater portion of the economic value that we create, but it also has to do with our internal efficiency. And again, being able to do more with the same or the same with the last, whatever scenario you might be in. But that's how we're able to ensure that we can deliver this backlog successfully for our clients and maintain that reputation and the honor position that we have with our client base today.

Right, right. No, that makes sense, Doug. As maybe a quick one for you or maybe correct me if I'm wrong on this. I think I heard you talk about 55% normalized free cash flow conversion, right? And I think you were assuming neutral working capital in that, [indiscernible] I'm wrong. And then how does the order exceeding your revenue dynamic play into it, right, as long as orders are above your revenue, should we think that working capital should continue to be a tailwind? Maybe just spend a couple of minutes on that, Alf, please.

Sure. So first of all, maybe the clarification maybe I made around our normalized working capital -- normalized free cash flow conversion. Again, I said that before, we have talked about it being 50%. And now as a guide at this point in time, we say that if you think about our EBITDA, we think we will be getting around 55% conversion from that EBITDA number if you assume working capital neutral. You're right about the dynamics of working capital being a variable to our business. And clearly, in a period of significant growth in inbound, providing that you can get the high-quality backlog that we've been able to do that gives us the ability to achieve early milestones and ongoing milestones in the projects and allowing us a consistent execution. We have the ability to stay neutral or better which is always the ambition we have as we execute the incremental subsea work. When you now look maybe a little bit at the inbound picture year-over-year as we kind of have similar inbound year after year. we may see some diminishing opportunities to incrementally build on that, but that's certainly always our ambition. But at this point, if I'm looking ahead, I wouldn't go much about neutral working capital at this point if you're looking ahead but that's certainly something to -- that we will come back and guide further on when we come back in February.

Our final question will come from the line of Mark Wilson with Jefferies.

Obviously, the adoption and the resilience of what you put in place here just jumps off the page yet again. And I'd say the ExxonMobil ahead Subsea 2.0 awards seems to be the ultimate validation of that. However, one part, Doug, I'd say that we haven't touched on is the question about installation capacity out there in the market, still essential for all clients. And obviously, you work with Saipem in Guyana at Hammerhead as well. So could you just update us on TechnipFMC's view on that merger that's going on to Saipem 7 in the market, and whether you see any impact from that regarding the vessel infrastructure you've spoken to in the past and indeed, if anything, worth commenting on your submissions regarding that process?

Sure, Mark, and thank you for your patience. So just a clarification. So well, first of all, thank you for the comments. Those are well received. Yes, the seventh project in Guyana was critical. The fact that 2.0 shows that evolution, that continued market adoption and with obviously a very important client to us. The only thing I need to clarify is we don't work with Saipem in Guyana. So we do and our scope is our scope and then the installation scope is bid separately. So that question would really need to be answered by ExxonMobil not by ourselves. In regards to the merger, look, the regulators will make their decision. Our customers will make their decision. So they ever the regulator decides and then there's whatever behavior the clients decide on how they want to react. We are in a position where when asked or encouraged by our clients or the regulators to comment. We have a responsibility to comment, and we're just providing clarifications on market, market segmentation and the way that the market operates, but it will be what it will be. Keep in mind that we have this relentless pursuit of reduction of cycle time meaning if we can now deliver a subsea project in 2 years versus 3 years, I've created 33% more capacity with my existing fleet. So this is about being more efficient, having higher returns, not having more assets.

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

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. If you have any further questions, please feel free to reach out to the Investor Relations team. Thank you for joining us. Regina, you may now end the call.

This will conclude today's call. Thank you all for joining. You may now disconnect.

So over the last several years, TechnipFMC has firmly established itself as the premier offshore equipment company in the industry having reshaped the Subsea market with this integrated offering and iEPCI approach has led to commanding market share in recent years. With this impressive backlog, FTI is in tremendous visibility along with structurally higher margins through its Subsea 2.0 offering.

It's my pleasure to introduce Mr. Doug Pferdehirt, Chairman and CEO of TechnipFMC. He was -- he's been CEO of FMC since 2016 -- I'm sorry, he's been CEO of FMC Technologies, excuse me, since 2016 and CEO of TechnipFMC since the merger of FMC Technologies and Technip in 2017. Thanks for joining us, Doug.

Thank you, Dave. Appreciate it.

So Doug, maybe we could start off here. Your business is really in the sweet spot. Over the years, when you see capital equipment companies, you either get orders or you get earnings growth, you very rarely get both. You're now in this sort of interesting sweet spot here. I was wondering if you could sort of talk about kind of how you're seeing those kind of different elements developing over the next several years, sort of the interplay. I mean, do you think you should see kind of earnings growth and order growth over the next several years based upon what you're seeing?

Well, thank you, Dave. First of all, thanks for having us here. Thanks to Barclays, and thanks to everyone in attendance and those attending via the Internet. So thank you very much for your interest in the company. The setup is quite unique, but it's also not temporary. There are some structural changes that have occurred that are really driving what we're experiencing today. And the resurgence of offshore is real and is sustainable. And we're doing our part to try to ensure that sustainability, and we can talk about that as we chat here this afternoon.

In terms of kind of the interplay, it sets up very nicely. We continue to see strength in the market. That's leading to a growing backlog, which obviously will then convert to revenue and revenue will convert ultimately to earnings. So there's no reason, and we've said this publicly, we remain very confident in our ability to be able to continue to grow in all of those areas, which, as you point out, is not very usual. It's not usual for any company in any industry. And to be in that position, we're very honored and very focused.

So you're on track to book $30 billion in orders over the last 3 years, if you include this year, and you recently said expect sort of another $10 billion next year. I'm curious how that order book has evolved. In other words, if we go back to 2023 versus, say, 2026, what's different between, say, the customers or the type of projects or the size? Has anything sort of changed or evolved in that backlog over the last 3 years?

The last 3 years in kind of our industry isn't a long period of time. So if you let me maybe go a little last 5 years or so, what has definitely changed is we have more customers. And I think this is really important and something that's not fully appreciated is kind of the whole Subsea offshore field development was limited to 10 to 12 customers for many, many, many years. It's now grown. It's grown because of the interest in investing in the offshore, but it's also grown because of the offering that we now have brought to the industry, which is the ability to be able to work with one company all the way from the field development or architectural phase through the manufacturing phase, the installation phase and then the life of field services phase.

Keep in mind, this is 3 decades we're talking about. This is typically 3 decades long. So with that capability, you now have new operators who in the past maybe didn't have the resources to be able to pursue a large offshore project like that, the talent, if you will. And they now can come and work with us, and we can take them through that entire 3-decade process as a partner. And so I would say there's an -- clearly an expanding customer base, clearly expanding geographical base. So we went from working in 3 to 4 pockets around the world to now expanding that quite rapidly. That continues to grow very nicely. And then finally, just in terms of the overall scope of work that we're performing has continued to evolve and continue to grow over time as well.

Some of that's -- curious how you see kind of orders from here changing. Is this going to be more about exploration converting into development? We heard Schlumberger talking about that on their call. I think it was in Namibia, they were talking about kind of moving into the development phase. Is it going to be more brownfield? I know you just announced a flexible order today. Can you talk to me about some of those components of kind of maybe what could change or what's going to be additive to your orders in the coming years?

So first, let me touch on the announcement or the press release this morning. So we just were awarded 2 large projects from Petrobras for flexible pipe, which is a unique technology that we have and is actually a very important part of our integrated offering. So we were excited about that. One of them being very much a technology-driven differentiation that allowed us to secure one of those 2 awards. In terms of the overall mix, it's a little bit of all of the above, Dave, to be perfectly candid.

Greenfields has surprised us, right? The percent of greenfield, which was about 50% of our inbound in 2024. The greenfields has surprised us a little bit. But I think, again, what you're seeing is you're seeing the shift of capital flows going to where there's access and the best economics. And that's offshore today. Not to offend anybody, but that's offshore today. And that -- and we've demonstrated not only are the economics better, but we've now demonstrated the ability to be able to execute on a repeat basis at a very high level, which is giving our clients confidence again. So if there's one big change, it's the level of confidence that our clients have to invest offshore because they know by working with TechnipFMC that they will indeed get the project delivered on time, on budget, if not ahead of schedule.

And when I say ahead of schedule, keep in mind, we're shrinking the schedule at the same time. We're accelerating the time to first oil. Brownfields continue to be a high level of investment. It's got the best returns. You've already invested in the capital infrastructure. You're really just adding wells to support that capital investment that you may have made 10, 20 years ago. So that's an area that has grown and will absolutely continue to grow. We've only seen the beginning of that investment. And there's also investment in renewables offshore that we also benefit from. So it's a little bit of all of the above that's really driving the inbound.

Doug, last year, when we visited your facility, you made an interesting comment, which really stuck to me, you said, my competition is shale. You talked about shale really being here. Can you expand upon a little bit for the audience? I thought it was a really fascinating.

Well, it always scares me when you remind me of something I said last year because it was a good chance I didn't remember it. But this one I did.

That was a good one.

No, it was actually somebody smarter than me asked me one day, who's your competitor? And I started rattling off other public companies and what differentiates us versus -- and it was -- that individual told me, that's not how you need to be thinking about this. It's just capital flow. You're just competing for the capital dollars. It was one of you. It was one of the investor I've known for a long time. And it really kind of resonated and it actually helped shape the strategy of our company, which not -- this isn't anti-U.S. shale. It's just you're fighting for the same capital dollars.

So how are you going to be more attractive? You've got more attractive reservoirs. I mean the reservoirs offshore are just phenomenal. They flow naturally. They don't need fracking, et cetera, et cetera. They're just phenomenal reservoirs in terms of traditional characteristics or Darcy's law, flow through a permeable medium, looking at things like porosity and permeability, they're by far, they're good classic reservoirs. The problem again was the cost, and it wasn't so much the budgeted cost, it was the actual delivered cost of these developments. So how do you attack that? You attack that through certainty, getting much better, much more predictable in what you do, and you do it by shortening the cycle time. If you can shorten the cycle time, accelerate time in the first oil project economics improve dramatically.

So by just focusing on those 2 parameters, fix our own problems, fix our own delivery as an industry, if you will, and then focus on shortening the cycle time. So if you kind of think about the 2 big changes in our organization, which is Subsea 2.0, which is our configure-to-order offering, that really focused on the do it better, do it in a more consistent way, do it in a more predictable manner. Subsea 2.0 clearly does that. Why? This is an offering that we're not building things for the first time. Traditionally, Subsea, project to project, first article, never built it before, intensive engineering would lead to potential quality escapes, which would lead to rework, which should lead to waste, et cetera, repeat, repeat, repeat. That's how the industry operated for decades. Subsea 2.0 takes that out of the equation.

On the other hand, iEPCI or the integrated offering is our ability to be able to shorten the cycle time. So when you look at those 2 and the interplay between those 2, that's what really drives our confidence and our ability to really do things differently. And what I hear from our clients repeatedly is you brought certainty back into the industry. meaning not me personally, obviously, a lot of people, 22,000 women and men a hell of a lot smarter than I am. But as a company, you brought certainty back into the industry, which gives them the confidence to invest in offshore again.

So I want to dig into some of the differences between last cycle and this cycle. That's clearly one of the big ones. But Subsea 2.0 has been a big one. I was wondering, can you talk about a little bit -- so it's about 30% of the order book today -- I'm sorry, so 70% of the order book today, 30% of revenue. How do you see that kind of changing? How does the revenue component, like by '26 or whatever, how are you sort of thinking about the kind of the overall...

It's a good question. It's one we debate a lot internally. More Subsea 2.0 is good for all the reasons I just described, predictability, performance, et cetera. It's also because of the flow of Subsea 2.0. Subsea 2.0, we build, if you will, or the manufacturing flow is 2x that of Subsea 1.0 or what the rest of the industry is building today. So you get more with less. You get twice the capacity through the same roof line, if you will. So it's important from that point of view.

The Subsea 2.0, when you think about it, the analogy that I like to use is the auto industry. So when I buy a car, I still fundamentally want to believe that, that automotive manufacturer is building a car just for me. You feel good about it. You had some choices. You had some drop-down menus. And they probably never built this car before. It's just for me, it's mine. They're never going to build it again. So you drive down the street, you see a dozen just like yours. Because all they built -- what they did is they took a very complex problem and they put it into configurable components. So 1 or 2 engine sizes, a couple of transmissions, this or that. And those are the drop-down menus. So we've done that with Subsea.

So Subsea 2.0 allows us -- allows our customer to basically use an app, and it's a set of drop-down menus that might be 5,000, 10,000, 15,000, 20,000 psi. It might have a couple of different temperature ranges, a choke, no choke, adjustable choke, a nonadjustable choke. And -- but all of those things they're selecting have been pre-engineered. So now at the time of that order, we have 0 engineering hours. We go straight into assembly and test, shortening the delivery time, increasing the certainty. So a couple of characteristics of Subsea 2.0.

Now where does it fit in the overall equation? It was introduced into the market in 2017. We had an expectation that we could penetrate about 50%, 5-0, 50% of the market. We've exceeded that. We've said it's over 50% today of our orders that were inbounding. But through the manufacturing plants, it's only about 35% -- 33%, 35%. So hence, you have that uplift of more of that backlog as it flows through the plant, the plant is going to go from making 30%, 35%, 40%, up to 50%, the level of the inbound orders. At the same time, the level of the inbound orders or the percent of the inbound from Subsea 2.0 continues to grow.

This is one of the key drivers in our earnings going forward. And it's one of the reasons why we can say with confidence that we have the ability to continue to grow not only revenue because you see that because of the inbound level and the backlog, but we're also going to be able to grow our EBITDA margin or our earnings because we have that additional throughput of the Subsea 2.0 going through the plant as an example.

Why would somebody not use Subsea 2.0?

Wow, on a live mic, Dave. There's not a reason not to. There might be a preference to the past. There might be a preference to competitive tendering. You can't competitive tender Subsea 2.0. There's only one Subsea 2.0 out there, and I'm proud to say it's TechnipFMC. So if you don't want to -- if you want to tender, then you have to go to a Subsea 1.0 type scenario, which means your project is going to take longer to be delivered. There's higher risk of project overruns, both in terms of schedule and cost.

But in your mind, you're saving a little bit because you did 2 bids in a buy. I wouldn't recommend it. I would say fewer and fewer customers are even considering it. And how do you see that as investors? 80%, 8-0, 80% of our business is direct awarded to our company. It never goes out to competitive tender because they want the Subsea 2.0, they want the integrated offering, iEPCI, and they see that these are really differentiated and give them better project returns. So it's a debate internally, and it's also obviously a good question you're asking.

I think there will always be some 1.0. The question is, do we want to be part of that? Or do we just leave that to the competitor and really just focus on the 2.0 market. What I am proud to say is we've never had a client go who went 2.0 ever go back. We've never had one who went 2.0, ever go back to 1.0. So it's also just getting them over that initial kind of threshold. But look, it's a big -- like I said, it's well over 50% of our inbound today. It's a big portion of our business already and will continue to grow.

Subsea 1.0 was the prior cycle back when you and I both had a little bit less gray. Well, I had -- you're looking good. I had a lot -- I'm fascinated by kind of looking back at kind of '06 to kind of '14 and kind of how -- or kind of '09 to '14 and how different that market was for the subsea market versus today. I want to explore a couple of things with you on that. So I recall back in kind of the peak of the market in 2014, I think it was Total called out $85 a barrel as the incremental dollar in offshore. That's now what, $40, $45.

Yes, half. This I cut in half. As you were saying, it's the most economic barrel.

How did it get there? How did we cut that down in half? Was it -- how much it had to do with Subsea? How much had to do with other things. Can you sort of just frame that a little bit?

Well, look, I think one must accept responsibility. So let's start with -- back at that point, and I was part of it, right? This isn't -- as a Subsea industry, we did not have -- the level that we were performing and even the expectation that the client held us to was far less than it is today. And you could deliver a project 1 year late and say, I'll try better next time. Well, gosh, could you really? I mean it was just -- it was accepted. It was an accepted behavior. It was not a good behavior, but it was an accepted behavior because nobody in the industry had differentiated.

Remember, this was Subsea 1.0. Everybody was doing first article on every job. There was always quality mistakes, errors. There were all these delays, all this rework. All these things were happening because you're building things for the first time. Even the same client would not order the same kit from project A to project B, even in the same geography. So you were constantly being put in this learning loop when you're learning, you're not efficient. When you're learning, you're making mistakes. So the whole industry was in that setup. What has changed is the Subsea 2.0 configure to order has given our customers still the opportunity like me when I'm buying my car to still get what I want, but it's taken out all of that risk, rework, quality escapes and engineering out of the system because I'm not building things for the first time in the Subsea 2.0 world.

So first and foremost, I think as an industry, we have to acknowledge we weren't doing a good job back then. We might have had good numbers. If you go back and you look at our numbers back then, they weren't bad, but that doesn't mean we were doing a good job. And it showed up in our customers' project returns because their project returns during that period where our margins were going up, their project returns were going down. That's not a sustainable business. And guess what, it ended. And then for 10 years, the offshore was still there, but it was not -- there was no real growth coming out of the offshore.

What we've now put in place and given our customers, again, that confidence in is we can increase our earnings and they can increase their returns. That's the win-win with predictability, with predictability. Remember, we talked about earlier, the reservoirs are there. It's not about going out and finding them. Now in that same period of time, there were some prolific discoveries, obviously, Guyana being on the forefront. So there was some absolute positive external factors as well. But I think we have to start with the fact that the industry's behavior -- no, the accepted behavior of the industry was not good enough. So we are held to a much higher standard today. I'm proud to be held to that standard, and we are confident we can deliver to that standard. That, coupled with some very prolific discoveries is really creating the market opportunities that we see going forward.

So we've had a lot of standardization. You've talked about Subsea 2.0. It seems to me like maybe technology differentiation is less important than it's really about execution and delivery to market. Is that kind of...

This is where you try to get my blood pressure up.

I was trying to...

So -- and I say that half jokingly, but quite serious. It's -- they go in parallel. Subsea 2.0 is a technology. And Subsea 2.0, we've talked a lot about, but there's many other things that we are doing today as well. Look, to drive improved economics offshore, we will have to continue to invest in technology. We have to continue to innovate. So it's really the 2 in tandem. And everything that we're talking about so far and other things that we're doing as a company are all focused on those 2 things. Now there's one common denominator between those, which is shortening cycle time.

So when we are looking at investments internally within our company, if you can't prove to us that it's going to reduce cycle time of an offshore project, we're not interested. We're not interested. It's all about the relentless pursuit of the reduction of cycle time. Going back to this, who's your competitor? Your competitor is capital flows. How do I compete against a short-cycle business, become a short-cycle business. Don't say it can't be done. We've taken a year off of Subsea project deliveries, and we're only starting. So if we can continue to drive that cycle time down, the reservoirs are more prolific, the reserves are there and the economics will continue to be best-in-class.

So technology plays a big part in it as well. I don't know how much time we have to get into it, but we could get into some of the very novel technologies that we're developing right now. One of them is the ability to be able to separate CO2 out of the well stream on the seabed instead of bringing it to the FPSO complicating the size and the function of the FPSO. If we can do it on the seabed, there's a benefit. Things like all-electric allow us to extend a further distance from the host facility. We're now using all-electric to actually retrofit hydraulic controls on the seafloor in situ without recovering the equipment, things that have never been done before in the industry.

I'm the last person who's going to downplay your technology. So sorry about that. I didn't need to get that direction. On the Subsea 2.0, can you talk a little bit just about your roofline, your manufacturing capacity? Are you -- do you need to expand more? Just give us an update kind of where are you there? Are you kind of set up for the next 2, 3, 4 years? How are you thinking about that?

The short answer is yes. But only if we continue to do everything we can to lean and we call it SSI; standardization, simplification, industrialization. So we just have to keep saving time and being more efficient and increasing the cadence to the plant. So I can tell you, we don't talk about extending roofline. I'm not looking at any AFE request to extend roof line because, again, remember what I said, if you can't prove to me that it reduces cycle time, we're not going to invest in it. So I'm not going to invest in fixed assets just to have more of something.

What I will invest in is technology, that's robotics. Let's just look at robotics. We use a lot of robotics in our manufacturing today. If I can incorporate robotics to be able to accelerate the flow of Subsea 2.0 through the plant, I will invest in that. So the short answer is we have the demonstrated capacity today, the throughput capacity that is double in the same roof line, double the capacity. So we've actually reduced roof line while we've grown the company, which plays well in terms of returns and free cash flow generation.

So maybe Subsea 2.5, if you throw in the robotics.

There you go.

Maybe in the last few minutes we have here, I'd like to talk a little bit about your Surface business. Can you talk internationally, but can you tell us -- remind us a little bit about kind of where your key countries are in terms of driving that business internationally?

Sure. So now we're going to talk about the Surface Technologies business. It's a smaller of the 2 businesses. It's -- we have a business in North America, which represents about 40% of the revenue of that business, 60% being international. Total company, our exposure to the U.S. is less than 10%. It's insignificant. But this is now just a Surface business. So the Surface business internationally for us is very much driven by the Middle East, very much driven by 2 countries in the Middle East that we're very proud of and are very technically challenging markets, but ones that play to our strength as a technology company. That's obviously being the Kingdom of Saudi Arabia and the United Arab Emirates. So ADNOC and Saudi Aramco are very important clients and really drive that international.

We also have activity in the North Sea. We have activity -- and when I say the North Sea for Surface, that may sound strange, but if our equipment is on top of a platform and it never goes in the water, that's dry, so we call it part of our Surface business, Africa as well as Asia, but it's really the Middle East that drives the majority of that business.

Now you recently built a new facility in Saudi. Is that facility in Saudi also going to serve UAE?

So it's a really interesting question. So we also built a facility in UAE. We are actually exporting now from the UAE facility. We will potentially be exporting from the Saudi facility and not necessarily just to the GCC area. We may go beyond that. These are world-class facilities that obviously, we benefit because we meet local content requirements.

And by the way, the customers -- those customers mentioned, do support your investment, which is important because some just say build it, but then they don't support it. They support it. They make it absolutely worth your effort to do. And they're very high performing. Both are very high-performing units for us as well.

On balance, would you expect your international business to see growth in 2026?

The international business on a stand-alone basis. Yes, it is shaping up quite nice.

And it's a very different business and more project-based in Saudi. So has that been versus transactional?

Very different. Yes, very different. A much higher standard, much longer term, you build a backlog. We have a backlog in our Surface business in the Middle East, unlike you do in North America, but a much higher standard, a much higher barrier to entry and a very technically competent client that has a very high expectation.

Great. Doug, thank you very much.

Thank you, Dave.

Always fascinating. Great.

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 TechnipFMC Second Quarter 2025 Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to Matt Seinsheimer, Senior Vice President of Investor Relations and Corporate Development. Please go ahead.

Thank you, Regina. 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. 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. 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 Douglas 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 impacts. 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. I am very proud of what our team has accomplished.

This was another solid quarter, driven by continued strength in execution from both the commercial and operational teams. I regularly speak to the transformation we have made in Subsea to achieve meaningful and sustainable improvements. 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 Technologies, a direct result of a similar transformation, driven by the right leadership focused on the right customers in the right markets 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 3 years, while improving operating margins and increasing cash flow.

Looking beyond North America to the international markets, which today represent nearly 2/3 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. 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 remains strong, nearly half of our project inbound was tied to greenfield developments. 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 relationships, which we work to build and enhance every day.

I'm proud to announce that we recently entered into a new iEPCI collaboration agreement with Vår Energi, 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. Our differentiation goes beyond customer relationships. 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 HISEP, a high-pressure separation process that enables the capture of CO2-rich dense gases 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-salt fields. 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 flexibles, 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 campaign. 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. Importantly, we have created a solution that can be used more broadly in applications that extend well beyond the pre-salt. 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. However, carbon capture and storage is just one application and electrification is not a one-size-fits-all solution. Additionally, the use of all-electric technology can be extended beyond new developments.

It 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 hydraulic -- using electric solutions. Whether it be new commercial agreements like our iEPCI collaboration with Vår Energi or the development of innovative technologies like hybrid flexible pipe and all-electric, we are honored to be our clients' trusted partner and the team they turn to for their most challenging projects.

Turning to the outlook. Offshore activity remains robust. Front-end engineering activity is strong, and our Subsea opportunity list remains healthy with name 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 sanctioning. 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 TotalEnergies for the first oil and gas development in the region.

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.

In closing, the market is not without challenges. 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 relationships. 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. Our unique opportunity set also gives us confidence that we will reach our 3-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. 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.

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 in the quarter was $2.8 billion, driven by $2.6 billion of Subsea orders. Total company backlog increased 5% sequentially to $16.6 billion. Revenue in the quarter was $2.5 billion. Adjusted EBITDA 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 Technologies.

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. 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%, up 70 basis points versus the first quarter.

Turning 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 $106 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 EUR 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. Net cash decreased modestly to $254 million. Moving to our guidance. 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. For Surface Technologies, we anticipate revenue to increase low single digit sequentially with an adjusted EBITDA margin of approximately 16%.

Moving to our full year outlook. 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 $1 billion to $1.15 billion.

All other guidance items remain the same. 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 6 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 flow. And given the strength of our balance sheet, we certainly have the flexibility to exceed that level.

Operator, you may now open the line for questions.

[Operator Instructions] Our first question will come from the line of David Anderson with Barclays.

So another strong Subsea order book this quarter. Clearly, you're confident in 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. I'm first curious about the services. You had 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 in 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 likely iEPCI direct awards?

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 changed the market dynamic, let's say. That results in us having an ever-increasing installed 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. 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 2 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. So yes, no one-off, just a -- this is a result of 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 and 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 Subsea services business to be a very strong and important component of our inbound. I believe there was a second follow-up, and I missed -- I lost it already, you can may be...

Yes. I was just sort of asking, you have your Subsea opportunities list, which you updated. I'm just curious, you're 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 how that's shaping up.

Yes. Good question. And just to remind everyone else, we publish the industry's Subsea opportunity list that -- 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. 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 2 to 3 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. 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 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.

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.

Our next question comes from the line of Marc Bianchi with TD Cowen.

I wanted to drill down a little bit more into the services success that you had this quarter. And specifically, it sounds like the services orders were quite strong. I'm curious if the revenue was also strong because 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 and how we should think about the growth of services for '25 and beyond.

Sure, Marc. You correctly point out, it's largely a book and 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. But the majority is book and 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 trajectory, as I was commenting earlier to Dave's question, the installed 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 at the time of the award, but again, very importantly, creates a very long, sustainable, important contributor to our company going forward.

Is -- Doug, I think previously, the outlook was for services revenue to grow in line with all of Subsea for this year. Is that still the case? Or are we seeing an acceleration of that?

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.

Super. And if I could just ask one real quick for Alf. The corporate has been running quite a bit below the mid -- or running quite a bit below the guidance range here. So -- but you framed the guidance -- the updated guidance with kind of solving for the corporate at $120 million. What's going on there? And how should we think about that once we get past the back half of this year?

No, I appreciate the question. Clearly, there is some timing in this. As a reminder, corporate expense includes executive management expense and corporate functions as well as some programs. And there are some timing in spend 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.

Our next question comes from the line of Scott Gruber with Citigroup.

I want to come back to 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 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. But there is -- there will be some press releases potentially in the coming weeks that will refer back to the awards that we had 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 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.

I appreciate that. I'm just trying to get a sense for the brownfield and the small projects because just contemplating history, usually, when crude price is moderate, you see the elevated returns and lower capital intensity of the brownfield projects kind of drive a mix 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 brownfield side. Can you just kind of discuss the appetite for brownfield and large greenfield kind of both sustaining even in light of more moderate crude prices? Does that just reflect the volume of capital dollars kind of shifting towards deepwater? Some color there 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 referred to it in my prepared remarks, there has been an absolute focus and commitment to moving greenfield -- offshore greenfield projects forward. We've seen no change in that behavior. 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 will take multiple years before they come online and are producing.

So they're looking at 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. 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 based on your earlier question, 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 have the -- 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 $1 billion. So the brownfield activity is very strong. You correctly point out and -- that it is extremely constructive in terms of economics. Very little capital investment required because the host facility already exists. 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 cost, which is often associated with large greenfield projects. So we're very focused on the brownfield market in 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 4x farther distance that we'll be able to tie stranded reserves back to a host facility. So increasing the total available market, if you will, for brownfield opportunities. So that remains very important as well.

Our next question comes from the line of Arun Jayaram with JPMorgan Securities.

Doug, 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. I actually think we probably need to redefine the Golden Triangle tonight 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 just a historical reference for those on the call, the Golden Triangle really being the North Sea, West Africa and Brazil 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.

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 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 Guyana, and we all know the importance of Guyana and certainly the importance of Guyana to TechnipFMC. We're honored to be the exclusive provider of subsea equipment in the country. And now we added Suriname, and Suriname where we received the first project award for their offshore production, which was an iEPCI and integrated project for our company. And we continue to see other areas in South America looking like future opportunities as well. So if we kind of draw the triangle a little more broadly, you start to encompass actually quite a few additional unique opportunities as well.

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 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.

You have 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. You have the 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.

Beyond that, I would look towards Asia Pacific, where in Indonesia, massive gas reserves. We've seen success by -- 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. And 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.

Great. I really appreciate it. Doug, my follow-up is regarding Surface. You announced some business transformation, 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 -- 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. 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 3 years. 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, 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 -- gain our portion of the economic value we create for our clients. 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. 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 U.S. versus a surface tree for the Middle East. And it's about 10x, 10x the degree of difficulty, 10x the cost, 10x the complexity. There is no translation between the North American market and the Middle East market. There is no translation. It is a very different market. And look, I think everybody knows that it acknowledges that. But it's important that, that is emphasized.

So what we have seen historically is a very focused group of companies, 2 to maximum 3 of us who work on that very high end. So in this transaction, you're just swapping one for the other, but with a massive learning curve associated with it. So we look forward to continuing to have a very focused market structure in the Middle East. And 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.

Our next question comes from the line of Sebastian Erskine with Rothschild.

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 nonintegrated nature of those scopes, kind of SURF only or SPS only, and it didn't make sense to kind of pull vessels away from integrated work to do that. We've obviously seen kind of Atapu 2 come out, and that looks like it's gone to -- also, 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 Petrobras. But just specifically on the prospects, how many of those realistically would you hope to convert?

Sure. 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 #1 subsea supplier, something we're very proud of, and it's reflected in our installed 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. And the one and only integrated award they did, not surprisingly, is the only integrated company went to TechnipFMC, and that was the HISEP 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. In terms of their opportunity set, it remains robust, and we remain selective.

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 nonintegrated 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 #1 supplier to Petrobras.

I appreciate that, Doug. And just a quick follow-up on the opportunities list. I noticed a couple in the changes in scope value on Vår Energi, kind of post the exclusive agreement with them and you. And then on Eni's kind of Coral Norte, is that purely like a tree count increase or anything specific you can flag there? And 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 hence, that increase in the value of the project?

No, a good observation and an important question. And 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 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, 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 project.

So in one case, and I don't want to be specific because that would -- 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 our configure-to-order Subsea 2.0.

Congrats on a strong quarter.

Our next question comes from the line of Victoria McCulloch with RBC.

So just firstly, [ it times ] well to carry on. Vår Energi's CEO commented about cost depreciation that he's seeing in the market. Obviously, that 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 -- maybe this is outwith your scope, but maybe that helps us to kind of get your view on where pricing is in the market. And you talked to being a competitive environment, but your views on that would be interesting.

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 in that portion of our -- the significant portion of our business. So that's what makes us just absolutely unique and something we're very proud of and something we work very hard to earn from our clients every single day and almost always results in direct -- repeat direct awards. So that changes that whole dynamic that you were describing, which I think would be more applicable to other parts of the industry -- or other companies in other parts of the industry.

In regards to the actual opportunity that you're referencing, look, our focus is on shortening the cycle time. So this isn't about unit cost. This isn't about pricing. This is about shortening the cycle time. So one of the successes we've had with Vår and predecessor companies that we had this similar relationship with was allowing them to achieve first oil far sooner than they would by working with anyone else. And by accelerating time to first oil, the overall project returns are improved significantly. So I think you have to separate the 2 subjects. One is a unit cost 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. What's happening in the rest of -- 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 project returns while we share a portion of the economic value we create.

That's really helpful, Doug. And I think that aligns with sort of maybe the comments being misconstrued in that it wasn't necessarily deflationary on the sort of subsea side of pricing. So that's interesting to hear that you're aligned with my views on that one. And if I can ask a follow-up, not really connected, but interesting comments on the hybrid flexible pipe. Ex Brazil, where would this be most -- what markets would be this most be attractive to sell into?

Good question. we are still kind of exploring that and 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 has clearly been a key market and a key driver for flexible pipe technology. And as a matter of fact, Petrobras has built an entire ecosystem, including vessels, onshore support, investment in products to make the hybrid flexible -- 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. 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 yes, 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 hinted to or, I guess, directly addressed in my script, which is weight. And the weight of the -- weight factors into everything. It factors into the manufacturing cost, the transportation cost, most importantly, into the cost of installation, the heavier, the more 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.

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.

Our final question will come from the line of Saurabh Pant with Bank of America.

Doug, I think at the top of the Q&A, I heard a short and sweet yes to Dave's question on $10 billion 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 pieces for us there, please?

Sure. So for all of 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 continue to be accretive to the backlog margins, we would anticipate further growth in our EBITDA margin for Subsea in 2026.

Right. That's fantastic. That makes a ton of sense. And then maybe one follow-up question on what you said in your prepared remarks, Doug, on the all-electric side of things, right, especially the 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. How big could that opportunity be? How quickly could that manifest, right? And in what regions?

Sure. So -- and let me expand on that just a little bit. 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 across multiple different purposes and solutions to help meet our customers' needs. So 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 CO2.0 tree, again, configurable and designed for the CO2 application, 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 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 installed base that I talk about that we have well over 50% of, 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 have -- over time, they do deteriorate, and it could lead to a situation where valves aren't operating appropriately 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.

That's a 6-, 9-, 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. 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, a couple of days that, that process may take. That's a game changer. So you bet, we're very excited.

Right. Right. No, we need to start flying-by-wire subsea, Doug. That makes a ton of sense.

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

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. If you have any further questions, please feel free to contact the Investor Relations team. Thank you for joining us. Regina, you may end the call.

This will conclude today's call. Thank you all for joining. You may now disconnect.

Yes. Good morning. Arun Jayaram again from the E&P and OFS research team from JPMorgan. Welcome to day 2 of our conference. Delighted to have TechnipFMC to present next. Delighted to have Doug Pferdehirt, who's the Chair and CEO of TechnipFMC, which is one of the industry's largest and most value-added providers of subsea equipment and infrastructure to the offshore industry.

Doug, how are you doing?

I'm well, Arun. How are you?

Doug, before starting our fireside chat, I was wondering if you could maybe just start with some introductory comments. We have some generalists in the audience, and maybe you could just talk a little bit about the story and investment case at TechnipFMC.

Sure. I'd be glad to. Let me start by thanking JPMorgan for having us here, Arun, for your hospitality and support; and to everybody in the room and those joining via the webcast, for your interest in our company. We don't take it for granted. It means a lot to us. So thank you very much.

I always somewhat jokingly say it will be a Netflix miniseries one day. It's been quite a journey in what we created here at TechnipFMC. So I don't want to give away the miniseries upfront. But it's a little bit hard to encapsulate. But if I tried to, just very briefly here, we recognized that the industry needed to change. We recognized it would take very bold moves in order to change the behavior of the industry and to create an environment where our clients were confident that they could invest in large offshore projects, both in terms of the economics but also in the certainty of the timing of the project delivery. These were -- have always been the challenges in the past on these large complex projects.

There are prolific reservoirs offshore, good, solid reservoirs, high permeability, high porosity, naturally flowing, no fracking, minimal flaring, et cetera, et cetera. But in order to unlock these, the way that business was done in the past would be multitudes of contractors working together, getting in each other's way, creating a lot of inefficiencies that would lead to cost overruns and delays in the actual project delivery.

We looked around the landscape and we decided if we brought together FMC Technologies with Technip at the time, we could create a new company that would have all of the capabilities to be able to deliver the offshore infrastructure in the water column and on the seabed in one contract with one contractor who would have all of the technology, the expertise and the competency to do so. That's what created TechnipFMC on the 17th of January 2017, almost a decade ago. And today, that is -- we've really helped transform our clients' economics. We've increased our clients' confidence and certainty of project delivery. And as a result of that, the iEPCI, which stands for integrated engineering, procurement, construction, installation, contracting model has become the industry standard.

In addition, we didn't stop there. We realized that we needed to look at the architecture itself. The architecture was part of the problem. It was bespoke. It was first article. It required 9 to 12 months of detailed engineering on every single project because we were never building the same thing twice. So we went the path of the auto industry and actually learned a lot from Toyota in the Lean Institute and put together what we call a configure-to-order architecture versus an engineer-to-order architecture, much like when you order your automobile.

You believe, at least I do, that, that auto manufacturer is making that vehicle just for me. I got to pick maybe 1 of 2 engine sizes, a manual or an automatic transmission, maybe an upgraded entertainment system and a sunroof and a paint color. But I feel really good because I feel like they're building it for me. But guess what, they're putting 0 engineering hours. When you hit Send on that app, it goes straight into their supply chain, it goes straight into their internal manufacturing assembly and test.

That's how we're doing Subsea today. It's revolutionary. So we call it Subsea Studio. It's the app that our clients use. It has the same drop-down menus, slightly different options, 5,000, 10,000, 15,000 or 20,000 psi instead of nav or no nav, slightly different Configurator fit for our architecture. But that means when they place the order, we take out that 9 to 12 months of engineering. All the engineering is done upfront at those component levels. There's no engineering at the time of the order. This allows us to deliver for our clients 9 to 12 months earlier than anticipated or they get to achieve production or first oil or revenue 9 to 12 months earlier, which really drives their economics.

And it's a combination of this integrated model, this new product architecture and the fact that we came together as one single entity that has really driven the industry to a new level. And the one number that I'm going to -- I'll tell you upfront, maybe repeat it once or twice, that really brings it all together because -- look, it matters more what our clients say than what I say. Our clients have -- and we're humbled and honored by this, give us 80% of our revenue, 8-0, 80% is direct awarded to our company, never goes out to a competitive tender. That's how unique and differentiated we are in this space, how much our trust -- our customers trust us and we're humbled by that.

All right. Doug, let's get started a little bit on the subsea kind of macro kind of picture. How would you characterize spending patterns in your core traditional deepwater markets? Obviously, a lot of commodity price volatility. But I was wondering if we could maybe start with some of the core traditional markets, the U.S. Gulf, Brazil and West Africa.

Sure. So that has always -- has historically been called the Golden Triangle. It's where 90% of the Subsea business has been, and throw in the North Sea in there as well, is really where the subsea industry and the offshore industry has been focused for many, many years. We'll talk later about how that's expanding, which is a major takeaway from this conversation as well.

But in those core markets, there's still a significant amount of activity. The activity is driven by the fact that the infrastructure and the support services industry exist. So if you have the existing infrastructure, it's very easy to add new wells because you can do it in a very short time frame and for a very low capital investment and at about the lowest breakeven that you're going to find in the energy space.

So when you originally do an offshore development, the hydrocarbon needs to flow to somewhere. It could flow back to shore through a pipeline, but typically, we're far offshore. So it typically floats to something on top of the water and it's a floating object, whatever it may be. Many are called FPSOs, floating production storage offloading units. So let's just go with FPSO. So it flows to the FPSO. So the FPSO is designed for the initial production rate, which is the highest production rate.

One of the challenges in our industry is fields naturally decline over time. The good news is offshore fields decline at a very slow rate, very slow rate, 4% to 6% per year as opposed to the U.S. shale, which can decline 60%, 6-0, in the first 2 years. So when you're offshore, you know that you're going to have a reservoir again because of the quality of the reservoirs that's going to be able to sustain a higher production rate, but it does decline over time.

So if you look at all those floating objects that are out there in these mature basins today, they're only producing at about 60% to 70% of nameplate capacity. And that's just because of the natural decline rate. The highest production was the very first day, and it declined every day since then. So you have that big capital investment that is, if you will, being underutilized today. So the ability to add brownfield or tieback wells back to that host facility without any additional capital investment in the host facility makes the economics very attractive.

Now also in these mature basins, there's new basins, if you allow me to use that term, or new plays within those existing basins. An example of that would be the Paleogene in the Gulf of America or U.S. Gulf or Gulf of Mexico. So it's absolutely prolific, and there's 5 projects ongoing there today. There will be more in the future. And this is deeper. This is a deeper reservoir but in the Gulf. So again, you get to leverage the fact that there's a lot of infrastructure in the Gulf, but it's a whole new horizon that creates a whole new growth opportunity.

In Brazil, they're looking at the Equatorial margin now. They've done a lot of seismic work, and now they're starting to look at the potential to do some exploration drilling there. Again, a new play within an existing basin. So it's -- there's a lot of activity going on. I didn't mention West Africa. We do expect to see several FIDs in West Africa. So West Africa had gone a little dormant for a bit. We see some new projects coming online. We announced one just last year for Shell for the Bonga North project in Nigeria as an example.

Yes. Doug, we talked a little bit about the traditional core, call it, the Golden Triangle. What are opportunities to grow kind of the deepwater pie? And talk about some of the emerging basins globally.

Sure. So I talked about the new opportunities within the existing basins. That's number one. And then there's the emerging basins. And I will tell you, this is probably for me the most exciting thing about the market today. In my entire career, there's never been this number of new countries or new basins that are going to be coming online offshore. It's phenomenal.

I like to travel. I like to meet new people. We just got the first-ever project for offshore production in Suriname was awarded to us at the end of last year by TotalEnergies and their partner, Apache, to do the project. That will be, again, iEPCI 2.0, if you will, our special unique characteristics, but just phenomenal.

So you have -- let's start with Guyana. Yes, Guyana has been a phenomenal success, but it's still relatively young. And what ExxonMobil has and their partners have done there is just absolutely phenomenal. We do all of the work in Guyana. So we are privileged and proud to say that. We earn it every day, but -- and we're very excited. We've delivered over 100 tree subsea in Guyana, and we have over 100 trees in our backlog and new orders and new FIDs to come in the future. So we're very excited about Guyana.

Suriname, we -- I just mentioned, first project end of last year. There are other projects and other operators in Suriname looking at opportunities, and Total may find additional opportunities there as well.

The Eastern Mediterranean is very interesting. It's a gas play. There's a lot of -- we know -- there's been projects in Israel. There's a lot of activity in Egypt. There's discussions around potential projects in Cyprus, interconnectivity of the 3. There's a lot going on there from a gas reserve point of view.

East Africa, a lot of focus on Mozambique. And we expect to see Mozambique projects move forward and to see new opportunities in Mozambique as well. Then you have Namibia and maybe South Africa, the Orange Basin, extremely interesting, multiple different operators looking at new opportunities there. And we continue to work with those operators to develop the front-end engineering to move those projects forward.

Indonesia is more of a mature basin, but it's gassy, and therefore, there's a lot of activity right now and new FIDs potentially coming out of Indonesia as well. There's other countries that I haven't mentioned that actually gets you to like 2035 and beyond. But I'm really talking about the stuff from 2028 to 2035. It's just phenomenal, how it's lining up and how the queue is materializing.

And one of the things that's driving that is these host countries have seen the success in Guyana. What has happened in Guyana is truly remarkable for the industry, but more importantly, for the Guyanese people. And these other host governments and host countries are looking at this saying, this is -- we want to do this for our country. We want to do this for our people. So they're working very closely with the industry to try to do what they can given whatever reserves that they have to get those produced, and that means working in a collaborative way to remove barriers and accelerate the FID on these projects.

Great. I want to talk a little bit about order trends. A few years ago, Doug, you outlined the company's expectations it could book. I believe $30 billion of Subsea orders between 2023 and 2025. You obviously hit your key criteria for the last couple of years, and that would imply about $10 billion or more of Subsea orders in 2025.

So my question here is you booked $1 billion of orders in 1Q, 1.4x book-to-bill. So you're ahead of kind of the trend. One of the things we do as we approach the end of the quarter, me and my team, is we look at press releases from FTI. And we haven't noted any press release orders. So I was wondering if you could maybe provide some thoughts. You hate to focus so much in the near term, but thoughts on 2Q or maybe just the cadence of orders for the balance of the year? And do you still have confidence on hitting that $10 billion number this year.

Yes. So $30 billion target over the 3 years, we're confident and that implies $9.8 billion for this year. We remain very confident in achieving that. In terms of the order flow, it's a good question. These are big projects. FID can happen on the 30 or 31st of a month or the 1st of the next month. And unfortunately, being a public company, that can affect a quarter. So it's always hard to predict. So we don't do quarterly. We just give annual guidance. Our annual guidance was approaching $10 billion for this year, which we remain very confident in. Strong start to Q1, Arun, as you pointed out.

In terms of the cadence, as we see it materializing at this time -- well, let me start with kind of the question about the press releases just for those who don't follow the company as frequently. There's really 3 buckets that drive our inbound. One is big press releases, big new projects that from a materiality point of view require or we issue a press release. Then there's a lot of these smaller orders, most of them being direct awarded to our company, which don't reach the materiality threshold for a press release. And it's kind of ongoing business for us because, again, we've done decades of work exclusively for some of the largest IOCs. And they're just on a cadence of ordering 2 or 3 of this or that per month, and that just works into our inbound on a continual basis.

And a lot of those brownfield tiebacks that I talked about earlier, adding 4 wells back to that floating unit, those are the type of things that would be in that unannounced bucket. So there's the announced bucket, the unannounced bucket.

And then our subsea services, it's a very important part of our business. It's very important for you as an investor. It is an OEM model. So we supply all the inspection, maintenance, repair and support of our equipment over the life of our equipment. Our equipment is designed to be anywhere from 25- to 30-year design life, sitting on the seabed 1 to 2 miles below the surface of the water. In other words, none of us in this room can hold our breath to get down there so this is all done by advanced automation and control and robotics. So it's very, very advanced type things that we do. We partner with NASA in that area because much of the things that we use is what NASA uses in space in terms of the robotics and the automation and control.

So now back to the cadence and how I see things playing out, in particular in the near term. No announced awards this quarter. That doesn't mean there wasn't big projects. Sometimes our clients will ask us not to announce until a certain date, and it may be driven by reasons outside of our control. So sometimes, we'll announce after a quarter. It's just unfortunate, but we'll announce the project and then say this was inbound in the prior quarter.

What I will say is, again, very, very confident in achieving the full year guidance of the $10 billion, strong start to Q1. If I look at it, I think probably H1 and H2 will probably -- it's probably not going to be -- it won't be linear, it won't be exactly flat quarter-to-quarter, but I think H1 versus H2 will be in a similar neighborhood.

That's helpful. You talked about some of the longer-term opportunities for FTI and some of the emerging bases and growth and even the traditional bases like the Paleogene. What type of visibility do you have in terms of 2026? One of the questions we get is you've announced so many orders over the last 3 years or so. Can you keep that pace of order activity into '26?

Yes. Look, I don't want to get too far ahead at this stage. But I would say, when we look at '26, and I'll even tell you '27, we have a robust list of projects, projects -- named projects, not, well, we think somebody might do a project. These are named projects that would support a very healthy order rate.

What I have said is that we do not see a cliff and we don't necessarily see a plateau at this time. There's a very healthy order rate and quantity of projects out there. Keep in mind that 80% direct award. So we have unique visibility into the market that the rest of the market does not have because our clients are working with us on an exclusive proprietary basis to develop these front-end engineering studies to allow these projects to achieve FID. We can be involved and typically are 2 to 3 years before that project ever makes it into the public domain.

So because of that visibility that our clients provide to us, which we are privileged to have and humbled to have. I will tell you, we remain very confident in the offshore activity. And all that I just said has nothing to do with all those emerging countries we talked about in an earlier question because they're all largely, largely '28 and beyond, some you could see in '27. But it's what drives this thing into the future.

Yes. Next question is maybe could you briefly describe your Subsea 2.0 offering?

Briefly?

Yes. There's a lot of ground to cover.

Well, I think I kind of got it earlier. Again, in the past, our customers would tell us exactly how to build something, exactly. They would give us the specifications and they would -- they go out and build it. And as an industry, we just accepted that. We knew it wasn't efficient. We knew it was disruptive. We knew it required an additional 9 to 12 months of engineering because we have to take their requirements, turn those into engineering specifications and then build it ourselves or use our supply chain. So everybody is doing everything for the first time, inefficient, ineffective, very costly.

We moved to this configure to order, like the auto industry, where we worked -- it took us 6 years of intensive engineering and working with our clients to get them to agree on those subcomponents. So we said, "Okay, there's going to be 3 types of choke. There's going to be 2 types of flow loop," whatever it may be. "Would you agree that this covers 99.9% of your needs?" We got there with our diverse set of clients. Then we were able to put together this Configurator.

So Subsea 2.0 is just truly unique in that it's the only way that the industry has to build something in a reliably, both in terms of cost and in terms of schedule, versus the traditional bespoke manufacturing way that we did -- which is Subsea 1.0 or which is the rest of the industry today.

Could you maybe elaborate on this concept of an integrated project? There's projects where FTI does the lion's share of the SURF work, but there's projects perhaps like Suriname, where I think you're partnering with Saipem. Give us a sense of the differences.

Sure. So we're excited. Suriname is an iEPCI project. It's an integrated project. In that case, when we looked at the most optimal way to develop the asset, we decided to partner with another company, in this case, Saipem, who is part of our vessel ecosystem, which is a group of companies who want to work on our iEPCI projects. I mean it's just really as simple as that.

Remember, we talked about iEPCI, the majority being direct awarded to our company, et cetera, et cetera. So those who have the vessel, those -- we have vessels. Our plan has been and continues to be asset-light. We've reduced our number of vessels while we've significantly grown the company. We do that because we can do things more efficiently. If we can take 9 to 12 months off of a project and deliver a project in 2 years instead of 3 years, in essence, I have 33% more capacity without spending any capital.

And we're not done. 9 to 12 months, we're going to keep taking time off that schedule. One, it makes us very competitive for our clients' capital because it's shorter cycle, it's more predictable, but also I'm doing more with the same. So I don't have to spend capital to grow, which is also one of the key attributes that are driving our returns and making our returns much more sustainable. From time to time, we do need other vessels. It is very common on our projects to use third-party vessels. And in that case, we have an ecosystem of partners or we can go to the third-party market, but then we'll just contract what we need at that time for those projects.

Great. Subsea services is something you highlighted. I believe last year, you generated about $1.65 billion of revenue, being precise here. What is your forward expectations for growth kind of in the segments? And how do margins generally compare to, call it, your equipment types of margin on just the subsea equipment?

Good question. So the $1.65 billion in 2024, we indicated we thought it would grow to about $1.8 billion in 2025. So it's a substantial part of our business. The easy way to think about it is the growth rate plus or minus the same growth rate as the overall Subsea business. It's more or less in line with that.

The profile of the business is, I guess, what's really most interesting, and it's these long-duration contracts. So think of it kind of more like an industrial-type play, a very predictable OEM. You do achieve good margins on that business. Now unlike some other businesses, you don't give away the product to get the sale -- the service tail on it. We get a good margin on both, but the service margins are certainly very attractive.

Okay. Let's talk a little bit about margins. And one of your customers just walked in the back, so just maybe be careful with this one. Your 2025 guide implies about 19.5% EBITDA margins. One of the things that we learned at the dinner last night is only about 1/3 of your throughput today is Subsea 2.0. And broadly talk to us on where you're at in terms of this margin journey.

Sure. So the margins have been expanding. It's really been driven by the internal efforts that we've been taking. When we work with our clients, we focus on cycle time. If we can deliver subsea equipment significantly earlier than the competition with certainty, it drives their economics. It improves their project return. So we sit down at the table early on. We agree on an economic hurdle rate. We work together in a collaborative way with our engineering team, with their engineering team to design a subsea architecture and a delivery system, i.e., the equipment and the installation. And that's the iEPCI.

And it can improve the returns from the client because they're getting first -- to first oil sooner, recognizing revenue sooner and with certainty, which is very important to them. We get the benefit of the efficiencies of our internal -- as I said, I think, to an earlier question, doing more with the same or more with less. And that's how we're able to gain a win-win situation where our clients remain very happy, hence, the 80% of our business being direct awarded to our company because they're seeing the benefit, they're realizing the benefit, and then we get the benefit from our own internal efficiencies.

Yes. I was wondering if you could talk a little bit about the flexible pipe market and maybe the steps the company has taken to commercialize a new composite flexible pipe solution, which could have some really interesting market in Brazil.

Sure. So look, the flexible market remains very strong. There's 3 companies who do that. We're the market leader. We continue to drive the technology development in that market. It's a very unique technology that is very important to our integrated project offering. It allows flexibility, no pun intended, to the way that our customers go about their field development, which reduces their overall cost.

The biggest market for flexible pipe today is in Brazil. Petrobras was one of the early adopters and really driven the application of flexible pipe both in terms of their flow lines as well as the riser systems. As they moved into the pre-salt developments, which has a very high CO2 content, they started to experience what is called stress corrosion cracking, which is a natural phenomenon of hydrogen embrittlement in any steel product, be it rigid pipe or flexible pipe.

So they started to look at alternatives to try to mitigate that, coatings, et cetera, things like that. They have been working with us for a number of years, and we've had a technology development going on for quite some time to come up with a SEC-compliant solution that would permanently remove the risk of hydrogen embrittlement. And we're doing that by coupling the traditional flexible pipe, which is -- think of it as -- of strands and layers of steel with a peak material which would not be porous and would -- therefore, you wouldn't have the opportunity to have hydrogen embrittlement as a result of water encroachment. So we're working on that. We have an ongoing qualification program with Petrobras. We believe we have the industry's only true SEC-compliant solution. And we're excited to bring that to the market here in a couple of years.

Great. We have time for one question.

Regarding the Petrobras contracts, you have a new technology that's in place being deployed in the next 3 years. That's the HISEP that looks -- when we look at what means in engineering, what it seems, seems kind of a bit a breakthrough in order to expand into fields with higher CO2 and higher, I mean, problems with gas. So if you could talk a little bit about it, how it's being developed. And when should it start to operate? I believe in metal field, but what size of breakthrough? Because Petrobras says that it could be used in much -- or other fields in order to revamp the production since you can on the seabed separate the CO2. So it looks good, but we can't understand what it could mean for the whole offshore industry.

Sure. So thank you very much. And my timer's blinking red at me, so I'll be very quick, but wonderful question. The head of our business, Luana Duffe, is here and she's actually the one responsible for this project. Look, it is a phenomenal project. It really tells -- we didn't talk much about how we develop technology. We talked about it in flexible pipe, but HISEP is another example.

The industry had a problems. CO2 is not something that is a -- you don't want to produce the CO2 if you don't have to produce the CO2. So you basically -- today, you have to bring the CO2 to shore or to the top side, you have to separate it, you have to reinject it. We worked with Petrobras for 7 years to develop a novel technology that allows us to separate the CO2 on the seabed and reinject it.

It will never come to the atmosphere. It will reduce their greenhouse gas footprint by 30%. It increases their production because it's in a mature field. And instead of producing the oil and the CO2 up to the FPSO, now it will be less CO2 or ultimately CO2-free. So it's a major, major, major technology development that we did together with Petrobras, and we're very excited. Yes, it's being used on the Mero 3 project initially, but we would expect that to expand and unlock other opportunities. Thank you for the question.

Great. Doug, thank you so much.