FTI

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. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star followed by one on your telephone keypad. If you'd like to withdraw your question, press star one again. We ask that you please limit yourself to one question and one follow-up. 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 1st 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 Form 10-K, most recent Form 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 five 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, and 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 7th consecutive quarterly increase in value.

Over the last two 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 a more than doubling of potential developments over $1 billion versus just two years ago. This list now includes 22 distinct clients, which speaks to our expanding customer base. This trend has been supported by our unique capabilities and 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.

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 completion 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%. 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 three 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. 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. Let me close on just two 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. 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.

We ask that you please limit yourself to one question and one follow-up. Our first question comes from the line of David Anderson with Barclays. Please go ahead.

Hi, good morning, Doug. How are you?

Good, David. Good morning.

It's been a long time since I've heard a service company talk about being in full growth mode here. Obviously we're looking towards 2027. 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 that's 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. Thank you.

Well, thanks for the question, David, 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 two years. 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. 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.

Doug, Subsea 2.0 has obviously been a game changer for you. You talked about reducing cycle time, reducing the cycle time there. That's been critical there. I'm curious how that's tying into what you're seeing in terms of subsea margins for 2027. You're guiding them higher. Can you talk about kind of what percent you're of that revenue you're expecting to be Subsea 2.0 within kind of the 2027 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 into 2027? Thank you.

Yeah, David, I don't have an exact number. We haven't rolled that forward, if you will. 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 at, as with Subsea 2.0 is representing about 80% of our new orders. 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 that Subsea 2.0 and the integrated model, iEPCI, is having on shortening cycle times and improving their economics.

As I said in the prepared remarks, we're happiest when our client wins and we win.

Appreciate it, Doug. Thank you.

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

Yes, good morning. It looks like we're probably going from a good market to potentially a great market. I wanna dovetail off the full growth mode commentary. You guys have obviously, you know, increased your own internal capacity with Subsea 2.0, but just curious how you think about preparing the organization for additional growth, especially if there are some kind of pull forward on some projects. You know, do you anticipate any constraints, you know, whether, you know, that's potentially roof line or engineers or vessel capacity? Just give some color on meeting that growth and, you know, what you're doing to prepare to meet that.

Sure. Good morning, Scott. Thank you for the question. 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 have been executing against it both in terms of Subsea 2.0 and iEPCI, creating TechnipFMC back on the 17th of January 2017. I guess we're approaching that 10-year anniversary. What is true, Scott, is that every single day in every single decision that we make, we ask ourselves, "Will this," whatever this is, a change in process, change in structure, an 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. It's a true scenario where both sides are satisfied in complementing each other.

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 or plant, and I can get more capacity because I'm doing things faster. This doesn't just affect the manufacturing. This is everything we do in every part of our company. Alf with his 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 reduce some of the mundane, redundant type tasks that they have to perform. They're doing more value-added work, which is much more motivating. Quite frankly, we can generate more with the same.

Our ability to be able to do that, which we have much more to, you know, 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, you know, 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.

Well, I appreciate all that color. Then turning to your initiative to industrialize SURF, I'm curious, Doug, you know, as you reap those benefits, you know, which I assume includes, you know, 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. 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. Just to remind everybody, we started now over a decade ago, back in 2014. Pre-merger, we started working on industrializing the sea floor. All of the assets that sit on the sea floor, not just the trees, but there's an entire village down there. Really working on industrializing all of that infrastructure, and that's been, you know, what we have referred to as Subsea 2.0 thus far.

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. Then we also picked up installation capability. We've begun that process, but we're only in the very early stages of the industrialization of, let's say, the remaining two-thirds. As we industrialize that, it'll be the same concept. We'll do more with the same, or we'll do more with less. 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.

That's it. I'll send it back. Thank you, Doug.

Our next question will come from the line of Arun Jayaram with J.P. Morgan Securities. Please go ahead.

Yeah, Doug, I know one of the core objectives of the companies is to reduce cycle times. I was wondering maybe as a follow-up to Scott's question, if you could maybe elaborate a little bit more on your Subsea 2.0 strategy. You know, it feels like you're putting together kind of a Manhattan Project type of a group at FTI to tackle this objective. Maybe give us a sense of where you're at in terms of the process. You got any pilots, you know, 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. 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 wanna 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. 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.

I really need to be careful not to go much further than that right now, Arun. We, our customers and hopefully you all have the confidence that we've demonstrated that we think differently, that we approach our 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.

Yeah, fair enough. Fair enough. My follow-up, Doug, is 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. Just may give us an update there and, you know, what kind of visibility do you have in that business and, you know, your ability to meet what looks to be a really good market for flexibles?

Sure. I'll come at it from a few different angles here. Let me start by saying flexible pipe is an integral part of our iEPCI offering. As the subsea architects, and, you know, 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. 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.

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. Very exciting about that. On the stress corrosion cracking angle that you mentioned, yes, the industry, it's a well-known industry problem. The industry's 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. 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.

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 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 sea floor. When you think about our approach to our capacity, that's gonna be by increasing efficiency through the plant. We have multiple flexible plants, not only in Brazil, but outside of Brazil. 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. We are increasing capacity, but we're increasing capacity by improving efficiency, not extending roof line.

Thanks, Doug.

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

Thanks very much for your time this morning. Can we start with a quick chat on subsea services? They were a notable contributor in the 1Q order intake. Can you give us some color on how that addressable market has evolved on a quarterly basis over the last year? How much of the $10 billion order intake do you expect to come from subsea services?

Well, in terms of the, you know, how has it evolved, Victoria continues to grow quite significantly. I think if you look back over the last several years, you know, we've indicated that it would be about $2 billion or about 20% of our revenue this year. You know, 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 dislocation, at some point in time, and it's not gonna be anytime soon, just because, again, the overall market is growing so significantly. The dislocation will be that the subsea services growth rate will continue, for an extended period of time. 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 install base on the sea floor. All of that needs to be maintained, all of that needs to be inspected, et cetera. That is an OEM model where we perform all of that activity on our own infrastructure. You know, it's important today, and it'll be even more important as we move forward.

Thanks very much. Just a follow-up one for Alf, obviously Q1 incredibly strong free cash flow, and CFO, 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, you know, 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, you know, 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. That is not something that we expect us to see be a headwind in working capital in the same way as we go through the year here. 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 CapEx 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. 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.

Thank you very much.

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

Hey, thank you. I want to ask about the Subsea orders first in the first quarter here. You know, maybe the headline was a bit lower than the midpoint for the year, and you talked about confidence going forward. I'm curious about the composition of the awards in the first quarter, because you did not have anything large that you press released or large that you mentioned in the press release for the quarter. You know, 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. You know, as you know, you've got the experience, you know, there's no way that this is ever going to be linear. It always, you know, comes and goes. It can be a matter of, you know, a few days at the end of one quarter, 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, 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. Look, I just want to reassure everybody that the underlying business is very solid.

You see the strength of having the install base that we have. You see the show up in our subsea services. You see the strength of the customer relationships that we have and the direct awards as a result of that shows up into the large portion of unannounced awards. 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. Thanks. 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, you know, the strength that everybody's 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?

Yeah, this is Alf here. I'll take that one. First of all, as I kind of mentioned in my prepared remarks, backlog scheduling in the Middle East has a big portion of the answer here. Even before the conflict, the backlog scheduling was not as high in terms of activity levels in the first half of the year. You're just continuing to see that spill over into the second quarter as well. The reality is that that is still a far bigger effect on the overall than the conflict itself. 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, they are creating efficiencies both for us and our clients.

That is also supporting a more favorable margin mix. 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. On the other hand, the offset is that we are seeing opportunity for stronger margin performance. Overall, we expect that the total EBITDA dollars for Surface will be in line with whatever you see implied by the midpoints of the current guidance. Just to be overly clear, the Subsea guidance remains unchanged. 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.

Got it. Thanks, Alf. I'll turn it back.

Our next question will come from the line of Caitlin Donahue with Goldman Sachs. Please go ahead.

Good morning, and thank you for taking my questions. You mentioned seeing an order step up in inbounds into 2027, which you anticipate to drive further earnings growth. Can you walk us through where you're seeing the most inbounds geographically, particularly as we now may see a move towards more incentivized exploration, whether this is greenfield versus brownfield work? Thanks.

Sure, Caitlin, happy to take your question. In terms of the 2027 inflection, it's really been, let me talk about the big buckets that it's being driven by, and then we can maybe get into the geographies. You know, 2026 is gonna 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. 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. 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.

Think about it as new big contributors to the offshore space, in terms of CapEx. That's one 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. Finally, yes, we do see now with a higher commodity price potentially being around for longer than many anticipated, that will also have a contribution, a positive contribution to those economics. Finally, we were really seeing a shift towards offshore gas developments. I would say we're going to see that a more balanced approach now with more oil, offshore oil developments, as well as the continuing drive up in the offshore gas developments. 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. I think those are areas that we'll start to see a lot of increased activity from as well. I don't wanna forget my Norwegian friends. You 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. Thank you. 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 towards the end of the decade. Can you just help frame the magnitude of what, you know, orders might look like over the longer term for FTI?

That's a fair question, Caitlin, and I thought I filibustered 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 gonna go from 10 to 10.1, we wouldn't make such a bold statement. I would consider it a bold statement.

Helpful. Thank you. I'll turn it back.

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

Hey, good morning. Appreciate the company's advancement in making offshore markets more short cycle than longer cycle. 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. Maybe, Doug, just some thoughts around the shortest cycle barrel of offshore and your exposure into those markets.

Sure. Good morning, Derek. An important question, and I referred to it earlier in the conversation when we were talking about, you know, some of the recent client conversations that we're having. You know, 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. 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. A floating something or a fixed bottom something or back to the shore, just depending upon which country in which we're working.

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, you know, the role that we're playing is one from a technology point of view. Subsea 2.0 plays a big part of that because remember, in the old Subsea 1.0 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 affixed 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. 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. Again, we always refer to the automotive industry. Think about the automotive industry. When you order a car, that is not your car.

You know, the engine's already been designed, the transmission's been designed, the frame, the frame and the chassis has been designed. It's only yours when they put everything when they put all the pieces together, apply the final paint color, then it's yours. It's a, it's a very similar approach, and it's really changed the game for our customers. They're really beginning to recognize that attribute that it provides. That helps shorten the shortest cycle barrel. The other way that we do that is through our all-electric system. The all-electric system allows us to increase the distance from those host facilities to look for these stranded reservoirs and to tie those back.

Finally, it'll 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. As we talked about earlier, that's a big effort that's going on within our company today to look at how we can industrialize that. We have the Subsea 2.0, we have the all-electric today, and in the future we'll have even more. You know, our belief that, you know, today that we can continue to reduce a significant portion of time off of an offshore development, whereas we've already taken anywhere from nine months-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 a little bit. Just curious if there's any updates around some of the, whether it's new technologies or R&D projects you're working on with third parties or, you know, startup communities in the new energy sector or bringing some onshore industries to the subsea. Just maybe some updates 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. Yes, please, rest assured, you know, 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, you know, what could be done. You know, 70% of the world's, is covered by water. The seabed is, you know, quite, it, you know, attractive, at least to us, it's quite attractive. You know, 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, 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. Petrobras is very pleased with the progress that we're making. This will be again, this is a very novel technology. The first time that CO2 will ever be separated on the seabed and reinjected, meaning it doesn't come up to the FPSO. It's never exposed to the atmosphere, it's a significant improvement in the way that things are done today. Also debottlenecks an existing production facility for Petrobras, allowing them to produce more oil, and generate obviously the financial benefit from that. That's a really interesting project, and it's going well.

In the North Sea, I'll be going in June to participate in a with my peers there and with our client. You know, that's where we're taking CO2 that's being captured from the emitters onshore, and then we're taking it 145 km offshore for permanent storage offshore. Again, these are really novel technologies. That one is enabled by our all-electric system, 'cause you wouldn't be able to do that with hydraulics, and certainly not be able to do it with hydraulics all on the sea floor like we can with the all-electric. Yeah, 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.

Great. Exciting stuff. Looking forward to it. Thanks, Doug. I'll turn it back.

Our next question comes from the line of Samantha Hoh with HSBC. Please go ahead.

Hey, Doug. Thanks for all the information that you shared, about Subsea and very exciting, what's in store. 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. Thank you, Samantha. Your question was on surface and completion activity in surface?

In North America.

Yes. Okay. Sure. We did see North America had a strong contribution. As you know, there was an acceleration in the conversion of wells that had previously been drilled but uncompleted to complete those wells. That obviously consumed. 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 CyberFrac, 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. You would have heard about this in the past. You know, the drillers do that for the drilling, and the frack companies do that for the fracking.

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. 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.

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

We have, certainly what 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, you know, did the right thing and, you know, 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. Remember, in Surface, our clients are both the E&P operators, but also the service companies. We are talking to our clients in Venezuela, and as they start to put together their plans to potentially move back into Venezuela, then we will be there to support them as they need us.

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

That's great. Thanks, Doug.

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

Hi, Doug. Good morning.

Good morning. How are you?

Good, Doug. Maybe I want to just go back to some of the line of questioning initially, right? Full growth mode, uptake in inbounds in 27 and beyond. Just from a supply chain standpoint, right, I want to go back to that. I know Subsea 2.0 makes things easier, right? As you, 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? 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, Saurabh. Let's do the, let's tackle the supply chain first. First and foremost, I wanna recognize my team. They've done a tremendous job, you know, 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. At the same time, we're growing the company. 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 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.

When we talked about in a 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. Everything is specific to the specifications of that project. By definition, it's novel, it's a novelty or a new product. The same thing when they place an order with the supply chain. In order to place that order with the supply chain, they have to do the drawings, they have to create all the bill of materials before they can even go to the supply chain. That typically takes nine months-12 months of engineering. You get an order, you spend nine months-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, pre-configured components, excuse me, including the components that are being manufactured by our supply chain. At the time of the order, It flows naturally straight into the supply chain. We eliminate the nine months-12 months of engineering, one of the key reasons we can shorten the cycle time on these projects. 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. 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 here at TechnipFMC. You know, I always give them the opportunity and ask them, you know, "What could we do better?

How could we work better with your company?" Across the board, this was suppliers from all around the world, they were thanking us for the way that we operate today. Just to put that into context, we sit down with them now on an annual basis. On an annual basis, we say, "We're gonna need 50 of this, or 500 of this, or 5,000 of this." This is a defined product that they've built before. By giving them the quantities, they can decide to do it, you know, 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. Whatever is easiest for them and whatever is best for their business model and for their capacity.

It really has changed the way that things are done. We obviously retain redundancy to address challenges that occur sometimes around the world. 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. I'm sorry, Saurabh, I've already forgotten your second question.

No worries, Doug. I was thinking on the partnership side of things, right? You addressed the supply chain side of things, right? The partnership, especially the vessel ecosystem.

No, no. Thank you for reminding me. And I, and I wanna start by saying the partnership approach also applies to our suppliers. You know, 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 one or two additional companies to the ecosystem. There's a few that also want to join the ecosystem, we are considering those as we move forward. Again, the success of the iEPCI model, the success of the direct awards to our company, has 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.

I got it. No, that's fantastic color, Doug. Just a very quick, follow-up, Doug. I know somebody asks this question, every quarter, right? 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. 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? Just a reminder of the key moving pieces.

Sure, Saurabh. I also just gave you 2027, so I thought we were being pretty generous. You know, here we are committing to not only inbound growth, but revenue growth, and even the 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 customer's need because of the privileged position that they allow us to be in. Look, the, the underlying fundamentals, it goes back to the earlier question about Subsea 2.0 and its ever-increasing contribution to the revenue. I indicated that it would be going to about 50% in 2027, yet inbound levels are 80%, you know that's gonna 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, as that continues to get worked off, that's obviously a tailwind as well. Sure, the market and the market dynamics are also a position of strength, and we benefit from that as well. I try not to focus on that one. It's why I said it last. 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 this sustainable business, and continue to drive the financial results even higher. Thank you.

Yeah, no, that's fantastic, Doug. Thank you.

We have reached our allotted time for questions. I'll 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.

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