TechnipFMC Q1 2025 Earnings Call Transcript

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April 24, 2025
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Operator

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 twenty twenty five Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer I would now like to turn the conference over to Matt Feinzheimer, Senior Vice President of Investor Relations and Corporate Development.

Operator

Please go ahead.

Matt Seinsheimer
Matt Seinsheimer
Senior Vice President, Investor Relations and Corporate Development at TechnipFMC

Thank you, Regina. Good morning and good afternoon and welcome to TechnipFMC's first quarter twenty twenty five 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.

Matt Seinsheimer
Matt Seinsheimer
Senior Vice President, Investor Relations and Corporate Development at TechnipFMC

Known material factors that could cause our actual results to differ from our projected results are described in our most recent 10 ks, 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.

Matt Seinsheimer
Matt Seinsheimer
Senior Vice President, Investor Relations and Corporate Development at TechnipFMC

I will now turn the call over to Doug Ferdijerd, TechnipFMC's Chair and Chief Executive Officer.

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

Thank you, Matt. Good morning and good afternoon. Thank you for participating in our first quarter earnings call. I'm pleased to share with you another strong set of financial results. Total company revenue in the period was $2,200,000,000 Adjusted EBITDA was $356,000,000 an increase of 38% when compared to the prior year, with a margin of 15.9% when excluding foreign exchange impacts.

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

Free cash flow was $380,000,000 a notable achievement in light of our typical seasonality. I want to recognize the fantastic execution of the global team. These results clearly demonstrate the substantial impact of our transformation driven by actions we have taken to simplify, standardize and industrialize, and we have only scratched the surface of what is possible within the organization. While our actions position us well for continued success for both our clients and stakeholders, we also recognize that this level of performance starts with high quality inbound orders. First quarter Subsea inbound was $2,800,000,000 with a book to bill of 1.4.

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

I would also highlight that orders have now exceeded revenue in eight of the last nine quarters. These results were supported by strong orders for both iEPCI and Subsea two point zero, including two announced projects: an iEPCI award from Equinor for the Johan Sverdrup Phase III project, where we have supplied the Subsea production systems in both previous phases and an iEPCI award from Shell that will include our Subsea two point zero technology on the greenfield Gato De Mato development offshore Brazil. In our effort to further advance the growth of our integrated portfolio, we announced a strategic alliance with Cairn Oil and Gas to deliver future deepwater developments offshore India using our iEPCI model. This collaboration agreement lays the foundation for early engagement, which will result in direct award iEPCI projects utilizing Subsea two point zero, allowing us to deliver Cairn's bold deepwater development vision faster and with greater project certainty. Taking a broader view of the offshore market, I'll start with our Subsea opportunities list, which now highlights more than $26,000,000,000 of opportunities when using the midpoint of project values.

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

Putting this into perspective, the value of this list has grown nearly 20% over the last twelve months and more importantly, represents the third consecutive quarterly increase. I'd also highlight the pervasiveness of new frontiers amongst these opportunities. Guyana, which some might consider mature, continues to be an emerging market in growth mode. Suriname, where the first offshore oil and gas development in the region, was recently awarded as an IEPCI to TechnipFMC utilizing Subsea two point zero. In Namibia, Mozambique and Cyprus, while in early stages, all represent long term opportunities as the development life cycle of these regions will extend well beyond the end of the decade.

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

Keep in mind, our Subsea opportunity list only represents a twenty four month view and does not represent the full opportunity set for our company. We also have access to a proprietary set of opportunities that extend well beyond this list, many of which will result in direct awards to our company. When taken together, iEPCI direct awards and Subsea Services, another key element of our commercial differentiation, constituted more than 80% of our inbound in 2024, and this trend has continued in the current year. This level of success is supported by the growing number of clients that are adopting integrated execution and Subsea two point zero, which I mentioned at the outset is indicative of our high quality inbound that has many positive benefits for our clients and our company. This makes us uniquely positioned for an expanding offshore market, one that is being driven by an increasing number of clients that are allocating a greater share of capital budgets to deepwater developments.

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

We also expect another year of growth in Subsea Services, driven by our large and expanding installed base, the repair and maintenance needs of aging infrastructure and the development of enhanced services. One of our new offerings is riserless coil tubing, which has expanded our well intervention offering. This award winning breakthrough solution has was developed through our technology alliance with Halliburton and creates measurable value for our clients. Technology innovation like this allows us to challenge industry norms and create tangible benefits for our customers by reducing cycle time and lowering the overall cost of life of field services. Before I conclude my remarks, I want to acknowledge two topics that are currently top of mind, commodity prices and tariffs.

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

Commodity prices are a primary variable in our clients' decisions to move forward on a development, but the impact they have on economic feasibility of a project can differ significantly by region and resource. Starting with the offshore. We continue to believe that offshore will remain a preferred investment of operators with deepwater attracting a growing share of capital flows, driven by much improved economic returns and broad access to these resources. This gives us continued confidence in delivering more than $10,000,000,000 of subsea inbound in 2025. Turning to U.

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

S. Land. This is amongst the most susceptible regions to lower commodity prices, given its relatively high cost of development. The majority of our Surface Technologies revenue comes from less cyclical international markets where most activities are undertaken by national oil companies with long term investment horizons and a materially lower cost of development. Here, we have already secured a significant portion of the inbound needed to support our full year guidance.

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

Importantly, we estimate that 95% of our total company revenue in 2025 will be generated from activity outside of The U. S. Land market. Now moving to the second topic. It is important to understand TechnipFMC's limited exposure to the recently announced tariffs.

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

Our revenue is derived from diverse sources, which include not just products, but also installation and services activities. When thinking about our potential exposure,

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

this

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

is confined to product related revenue from our operations across U. S. Land and The U. S. Gulf.

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

And given our mitigation efforts, we anticipate the impact to total company adjusted EBITDA to be less than $20,000,000 for the full year. So you can clearly see that TechnipFMC has limited exposure to regions most impacted by commodity prices and tariffs. To close, this was another quarter that clearly demonstrates how TecnidefMC truly stands out. In a dynamic environment, we have differentiated ourselves with a strong backlog totaling nearly $16,000,000,000 providing revenue that extends through the end of the decade exceptional execution driving robust cash generation and increased shareholder distributions, allowing for even more share repurchase at a time when our equity offers a very compelling investment opportunity. Our unique commercial model and product differentiation is providing real value and greater project certainty to our customers.

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

And our high quality backlog and growing pipeline of services opportunities can provide greater stability through the near term uncertainty. Importantly, our outlook for both Subsea inbound orders and total company adjusted EBITDA for 2025 remains unchanged. We are excited about what lies ahead for us, and our opportunity set is deep and diverse. And at the same time, our execution is strong and accelerating, and our business transformation is creating even more value for our clients, our company and our shareholders. I will now turn the call over to Elf.

Alf Melin
Alf Melin
Executive VP & CFO at TechnipFMC

Thanks, Doug. Inbound in the quarter was €3,100,000,000 driven by €2,800,000,000 of Subsea orders. Total company backlog increased 10% sequentially to 15,800,000,000.0 Revenue in the quarter was DKK2.2 billion. Adjusted EBITDA was DKK356 million when excluding a foreign exchange loss of DKK12 million and restructuring, impairment and other charges totaling DKK1 million. Turning to segment results.

Alf Melin
Alf Melin
Executive VP & CFO at TechnipFMC

In Subsea, revenue of €1,900,000,000 decreased 5% versus the fourth quarter. These results were driven by lower activity in Africa, the North Sea and the Gulf Of America as well as reduced services activity due to typical offshore seasonality. This was partially offset by higher project activity in Asia Pacific and Brazil. Adjusted EBITDA was €335,000,000 a modest sequential decline, driven by lower services activity and reduced fleet availability due to scheduled maintenance in the period. This was largely offset by strong project execution.

Alf Melin
Alf Melin
Executive VP & CFO at TechnipFMC

Adjusted EBITDA margin was 17.3%, up 80 basis points from the fourth quarter. In Surface Technologies, revenue was €297,000,000 a decrease of 7% from the fourth quarter. These results were driven by project timing in The Middle East as well as lower project activity in Africa and Asia Pacific. This was partially offset by higher activity in North America. Adjusted EBITDA was CHF 47,000,000, a decrease of 13% sequentially due to lower activity in international markets, partially offset by higher activity in North America.

Alf Melin
Alf Melin
Executive VP & CFO at TechnipFMC

Adjusted EBITA margin was 15.7%, down 110 basis points versus the fourth quarter. Turning to corporate and other items in the period. Corporate expense was $26,000,000 net interest expense was $10,000,000 and tax expense in the quarter was 87,000,000 Cash flow from operating activities was $442,000,000 and capital expenditures were $62,000,000 This resulted in free cash flow of $380,000,000 Our strong start to the year reflects the solid operating performance in the quarter, driven in part by strong customer collections. We repurchased €250,000,000 of stock in the first quarter. When including $21,000,000 of dividends, total shareholder distributions were $271,000,000 We ended the period with cash and cash equivalents of 1,200,000,000.0 Net cash improved to CHF282 million.

Alf Melin
Alf Melin
Executive VP & CFO at TechnipFMC

We remain focused on shareholder distributions and reiterate our intent to distribute at least 70% of free cash flow this year. And even at this high level of distributions, we will have the flexibility to pay down €200,000,000 of private placement notes that mature at the June. Given our limited exposure to The U. S. Land market and potential tariffs, we have confidence in providing thoughts around our outlook.

Alf Melin
Alf Melin
Executive VP & CFO at TechnipFMC

For the second quarter, we anticipate Subsea revenue to grow low double digits sequentially with an increase in adjusted EBITDA margin of approximately 400 basis points. For Surface Technologies, we anticipate revenue to increase approximately 5% sequentially with an adjusted EBITDA margin of approximately 15.5%. For the full year outlook, we remain confident in our prior expectation for total company adjusted EBITDA of approximately 1,760,000,000 when excluding foreign exchange. This guidance is supported by our substantial backlog and continued strength in our execution and also includes the potential of incremental tariffs. Considering our first quarter cash performance, we are increasing our full year expectations for free cash flow to a range of 1,000,000,000 to €1,150,000,000 In closing, we appreciate the market concerns regarding the commodity price and tariffs, and Doug addressed these potential exposures in his prepared remarks.

Alf Melin
Alf Melin
Executive VP & CFO at TechnipFMC

That said, we have not let the external environment distract us, and this was evident in our solid first quarter results. The team is intently focused on execution and continues to build up on our strong operational momentum. Additionally, we delivered exceptional free cash flow in the period, yet another tangible benefit of the changes we have made to the operating model. Importantly, these changes are structural, giving us confidence in our ability to convert even more of our EBITDA into cash in 2025. They also provide us with considerable flexibility as evidenced by our continued commitment to return at least 70% of free cash flow to shareholders in the current year.

Alf Melin
Alf Melin
Executive VP & CFO at TechnipFMC

Our unique operating model supports it. Our robust backlog supports it. And our strong balance sheet supports it. Operator, you may now open the line for questions.

Operator

Our first question will come from the line of David Anderson with Barclays. Please go ahead.

J. David Anderson
J. David Anderson
Managing Director at Barclays

Thanks. Good morning, Doug. How are you?

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

Good morning, David.

J. David Anderson
J. David Anderson
Managing Director at Barclays

Doug, I certainly appreciate the longer cycle nature of Subsea that gives you the confidence in more than $10,000,000,000 in orders this year. But I'm wondering if the current environment favors certain markets moving forward over others. US Gulf is a fairly small component of your subsea opportunities chart, but just wondering if you think that gets pushed out because of some of the higher development costs either with tariffs or wellheads or whatnot. On the other hand, could Petrobras push forward even faster with that growing project list? Intuitively, was thinking maybe some of these orders could get pushed out in the twenty sixth, but you don't seem very concerned.

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

No. That's a fair question, David, and, you know, one that, obviously, everybody's, you know, putting a lot of attention on. We tried to address it in the, you know, prepared remarks. And as you point out, our exposure is very limited. But let me just maybe turn to what, the conversations with the clients.

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

We are not hearing and being requested to defer push out project activity. I would say the conversations have remained fairly consistent and maybe even a little bit accelerated. And what do I mean by accelerated? Our clients have a phenomenal set of opportunities as reflected in our Subsea opportunity list, but more importantly within their own organizations in the offshore domains in The U. S.

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

Gulf, but also internationally. And they're seeing the need to secure the best capacity from the industry to deliver these projects. The whole key in offshore developments is the certainty of the project delivery. This is what has been an issue in the past is companies that had not that were all operating in the same kind of bespoke manner, we would inevitably run into execution issues as activity increased. What we have demonstrated, and I'm proud to say only we have demonstrated, is the ability to significantly increase our volume while not sacrificing certainty.

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

So the reason our clients are coming to us to secure our capacity earlier than normal is they see the benefits of iEPCI and of Subsea two point zero and of our operating model. This gives them the certainty and the confidence to move these projects forward, which as stated in my prepared remarks, still have some of the best project economics. Speaking specifically to The Gulf, which was your question, I do not see a slowing in the cadence of the developments of some of the newer greenfield opportunities like the Paleogene. As you know, it's very active right now. There are likely to be subsequent projects that will come from the Paleogene.

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

Beyond the Paleogene, when you look at the economics associated with the brownfield opportunities, they're some of the best. And it's simply because there's not the capital required for the floating structure that would be required in a greenfield development. So then when you look at The U. S. Gulf, you realize there's a significant amount of installed base in terms of floating structures, which would allow for greater brownfield opportunities.

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

So what inevitably you could see in a low commodity price environment is potentially a slowing of greenfield developments in a place like The Gulf. But I think you would see an acceleration in brownfield developments because the economics of those projects are just exceptional, again, given the fact that you don't have the capital allocated to the floating structure. So I think The U. S. Gulf is a little bit in a special zone because it has the mature field, so it has the opportunity for the brownfield tiebacks, but it also has a very prolific and very exciting new greenfield region, the PediaGene, which we would expect our customers to continue to prioritize amongst their opportunity set.

J. David Anderson
J. David Anderson
Managing Director at Barclays

Appreciate the color.

J. David Anderson
J. David Anderson
Managing Director at Barclays

We're facing another downturn. You've been here before. We've all been here before, but you haven't had this iEPCI I model really as fully, as comprehensive as this is today. I'm just curious what, if anything, your customers are asking of you and what you're trying to do for them. And we're clearly, you know, if if you if you you're clearly not talking pricing concessions concerning the current market structure.

J. David Anderson
J. David Anderson
Managing Director at Barclays

But with most of your orders going from direct awards, is there anything you could do to push forward those environment, or is it just simply about project certainty like you talked about? And customers just need to look through the oil market uncertainty. Is there anything you can kinda do here? This one I'm curious about.

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

Sure. And Dave, I'm just going to maybe key in on one word you said and maybe it's unfair. But in offshore, we are not seeing a market downturn. Let me just start with that. We are not seeing any slowing of the opportunity set.

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

I can tell you the tendering activity. When I look at my calendar and how my time is being spent, There is certainly no slowdown in terms of tendering or discussions. And as a matter of fact, in some cases, there's actually an opportunity there's opportunities to accelerate. In terms of our where we are as a company, and appreciate you pointing that out. Look, in a period of uncertainty, and we don't deny that this is a period of uncertainty, but in a period of uncertainty, we have never gone into it with a backlog as large or more importantly as high quality that we have today.

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

So keep in mind, we're sitting on a substantial backlog that covers multiple years that provides that really takes out that short term uncertainty risk that you would have in the very short cycle book to bill markets like The U. S. Land, And therein lies the challenge. But for the offshore market and for our position in the offshore market, which as you know has improved substantially over the last several years, puts us in a very strong position to weather any uncertainty.

J. David Anderson
J. David Anderson
Managing Director at Barclays

Much appreciated. Thanks, Doug.

Operator

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

Arun Jayaram
Arun Jayaram
Analyst at JPMorgan Chase

Yes. Good morning, Doug. Last quarter you mentioned how you thought 2026 would be kind of a significant year for Subsea orders with further margin expansion potential. I think you just mentioned in response to Dave's question that the tenor of your conversations with customers really hasn't changed too much. So my question is, how do you how would you gauge the order outlook for 2026?

Arun Jayaram
Arun Jayaram
Analyst at JPMorgan Chase

And when do you think you'd be in a position maybe to provide maybe even a soft outlook for 2026 relative to the 10,000,000,000 per annum orders you've been clipping over the last three years, including 2025?

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

Good morning to you too, Arun. I knew I wasn't going to get very far into this conference call without talking about 2026. And I guess we're privileged to be in a position to do so. But but let's be let let me just reinforce that, you know, we just came out with confidence in stating that our 2025 total company EBITDA target is unchanged. That's really important because, as you know, this is an earning cycle where many are not able to, you know, to confirm their q two guidance, let alone provide twenty twenty five full year guidance or commit to unchanged given everything that's going on.

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

So, you know, I do wanna start with that. I think that's important. And then, of course, once one does that, it kinda begs, well, what could 2026 do? So I don't blame you for asking. Arun, I would tell you my opinion of 2026, as you correctly summarizes, remains unchanged.

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

As you know, most of the conversations we're having with our clients now are really 2028 and beyond. So the order flow in 2026 is really going to be a function of the timing of FIDs. I'm not concerned about the probability of the FIDs. Again, the opportunity set is very rich. When we talked about could it also be in the $10,000,000,000 range?

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

Does it look very solid? Yes and yes. Again, will just come down to the process and the timing of the FIDs. But the quality of the advanced stage of the commercial discussions on those projects is very real, increases the probability. Many will again be direct awarded to our company.

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

It's just a very humbling and unique position to be in.

Arun Jayaram
Arun Jayaram
Analyst at JPMorgan Chase

Great. That's super helpful. Maybe my follow-up. We were pleasantly surprised the tariff impact is very, very minor, call it less than $20,000,000 So maybe just if you could dig down a little bit, is this a function of FTI? Obviously, a lot of local content.

Arun Jayaram
Arun Jayaram
Analyst at JPMorgan Chase

Is the relatively known number a function of your ability to adjust the supply chain? Or is this maybe embedded in some of your contractual agreements with customers where you did were not taking on this risk?

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

Sure. And I'm gonna get let Alf provide some color on this one. But let me start, Arun, with just I wanna reiterate a number that I had in my prepared remarks, which is 95% of our revenue comes outside of The U. S. Land market and that's really, really important.

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

So when you think about our company and yes, we're global, yes, we have presence in The U. S, and it's important to us. But we really are the international company. We have the broadest international footprint. And as a result of that, in the scenario that we're talking about here today, it's certainly just from right off the top, it just dramatically reduces mathematically our exposure.

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

But I'm going to have Elf provide some additional color around that.

Alf Melin
Alf Melin
Executive VP & CFO at TechnipFMC

Yes. So in addition to the limitation just of the overall footprint, and we said that the exposure is really limited to U. S. Land and The U. S.

Alf Melin
Alf Melin
Executive VP & CFO at TechnipFMC

Gulf. And when you think about what all we do in these areas, not everything is related to products, right? We talked a lot about that we are doing installation and services activities, and those obviously have no foreign content. So that's important. So it's really narrowed down to certain products that are being sold in The U.

Alf Melin
Alf Melin
Executive VP & CFO at TechnipFMC

S. Now based on what we know now and some of the mitigation actions that we do have in process, we talked about that we see no less no more than €20,000,000 of impact to financials this year. And I want to point out another thing that this is spread pretty evenly between the two segments. So when you think about that in the context of our guidance, but most importantly in the context of our guidance, you should know that it's contained within the guidance ranges that we have given.

Arun Jayaram
Arun Jayaram
Analyst at JPMorgan Chase

Great. Thanks a lot.

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

Maybe Arun, I'll close on that one. This is we have very deep and intimate relationships with our customers. When something like this happens, we sit down with them and we work together.

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

And it could result in some changes in the way that things flow. There's solutions if you are willing to work and your client more importantly is willing to work in a collaborative way with you and we're in a strong position to do so.

Arun Jayaram
Arun Jayaram
Analyst at JPMorgan Chase

Thanks, Doug.

Operator

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

Atidrip Modak
Atidrip Modak
Analyst at Goldman Sachs

Hey, guys. Doug, you mentioned that most of your conversations are for 2028 and beyond. I'm just curious what those customers are saying with respect to those long dated projects. Has the current environment affected that at all versus what you were hearing earlier or is it steady?

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

Good morning. Well, first of all, they're looking at a very different commodity outlook when they're looking at that period of time. So that's obviously proprietary to them. But I can assure you they're not looking at the very recent fluctuations in the commodity price. They're looking at a much longer term strip, as you can imagine.

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

They're looking at projects for the latter part of the decade that will be delivered in three to five years. So that's a very different outlook. The other thing I would say is they're also looking more at gas. So it is more gassy than oily in that time frame, and that's what makes areas like East Africa, the the the Mediterranean, Asia, you know, start to gain a lot of attention as well. So it also kind of expands the opportunity set, but I would say more gas focused and oil focused in that latter part of the timeframe that we're discussing.

Atidrip Modak
Atidrip Modak
Analyst at Goldman Sachs

That's very helpful. And then on the Surface Technologies side, just wondering if there's any sensitivity around that in the current environment.

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

So good question. And, again, it's really two you know, a tale of two stories here. We'll start with the international. As you know, the bulk of our international earnings come from The Middle East, and the bulk of that comes from Saudi Aramco and ADNOT. These are customers that have very strategic and long term views.

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

They tend to react less to short term commodity prices, and they also have very different breakevens than other areas around the world. So as a result of that, I would say greater stability, an area that you know we've invested heavily in, in terms of our Surface Technologies business to ensure that we had world class industry leading capabilities in both The Kingdom as well as in The Emirates. And as a result of that, we are being we are receiving preferential treatment because of the investment that we made. So that remains very positive and that retains a very positive outlook and much less susceptible to short term fluctuations. The other side is The U.

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

S. Land market. And clearly, this is where there is the greatest exposure. Again, I'll emphasize that that's a very small percentage of the total company's revenue. And an area that one of the earlier questions that we've seen cycles before, I've seen a lot of cycles in North America and it's one that we know how to manage and we will manage proactively.

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

That being said, it's also important to point out in The U. S. Land market, we really work for some of the largest clients. The bulk of our revenue, a significant amount of our revenue comes from a limited set of clients. So we're not working broadly and extensively for the independents and the privates.

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

We're really working for the majors. There you're going to have greater stability than you're going to have on some of the smaller companies that don't quite have the same balance sheet as the very large companies that we work for in The U. S. Land market. But look, we're in active conversations, very transparent conversations with our customers and we will take the actions that are necessary to ensure that we retain the integrity of our business across the globe.

Atidrip Modak
Atidrip Modak
Analyst at Goldman Sachs

Very helpful. Thank you, Doug.

Operator

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

Mark Wilson
Mark Wilson
Managing Director at Jefferies

Thank you and good morning. I'd like to ask Doug regarding which, if any, of those subsea markets that you show you're seeing competition to your offering. And here, I'm speaking specifically to not only the iEPCI, but the Subsea two point o setup. Because clearly, that's been adopted by pretty much all the major deepwater companies, Exxon, Shell, Total, etcetera. But I note that six or all six of the opportunities in Brazil are with Petrobras, which obviously has its own standard setup, and that works for it.

Mark Wilson
Mark Wilson
Managing Director at Jefferies

But you've seen Subsea two point zero into Brazil now with Shell. What is the potential for take up on a broader scale in Brazil? And what broader competition are you seeing in other areas? Thank you.

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

Sure, Mark. So Brazil had Petrobras has their own standard. So they have a standard tree design that gets bid out to the menu, to the subsea community. And it's built to us, you know, to a similar to their standard. It is not subsea two point o.

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

It is built because they're trying to build it to have, let's call it, a universal adaptability, it's got some additional configuration that makes it not as efficient as Subsea two point o. We have we certainly have and continue to have talks with Petrobras about that. And I remain optimistic that Petrobras does see the value and will potentially embrace Subsea two point zero. In the meantime, they continue to tender their standard. And it's interesting to us.

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

We have the largest installed base in Brazil. We have a very strong subsea services business in Brazil and it benefits obviously from having the installed base. So you'll see tenders come out on occasion and we do tend to participate in those tenders for Petrobras. It's also important, as you noted, in Brazil, although Petrobras is clearly a significant portion of the market, there are other operators. And we're now offering Subsea two point zero for multiple operators in Brazil.

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

You pointed out Shell with the Gato De Mato project, but we're also doing the Haya project for Equinor. This was another IEPCI two point zero. And we also delivered a project for Karun Energy, which was an IEPCI two point zero. So two point zero is in the Brazil market. Petrobras does not tender the two point zero because they're trying to tender their standard product that can be manufactured by multiple companies.

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

So that's just kind of the lay of the land, but it remains an important market for us. And obviously targeting iEPCI two point zero opportunities is important. The opportunity set that you see on the Subsea opportunity outlook list, those are installation projects. So those are not equipment projects. So that's just a different set of opportunities that you see there.

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

But you'll probably be hearing about a Petrobras tender for equipment relatively soon if you heard about it. And then beyond that, in the North Sea, there's a NORSOC standard, which we have a standard tree for the NORSOC to be NORSOC compliant, and we continue to deliver that in that market. But beyond that Subsea two point zero as you point out has really proliferated the market and we would expect it to continue to grow. We're in a unique position and that we're the only ones who have the Subsea two point zero. And as a result of that, there has been a significant amount of direct awards.

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

It's not something that we expect to be emulated by the competition. They've chosen to consolidate and build scale and mass around the one point zero offering. And that's just a different strategy. But we continue to invest in two point zero and beyond, which will continue to give us the competitive advantage.

Mark Wilson
Mark Wilson
Managing Director at Jefferies

Thank you very much. I'll hand it over.

Operator

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

Saurabh Pant
Saurabh Pant
Analyst at Bank of America

Hi. Good morning, Doug and Ed. Good morning. Doug, maybe I wanna touch on the execution as a more broader topic. You talked about that as rude comment that it's a pleasant surprise.

Saurabh Pant
Saurabh Pant
Analyst at Bank of America

The impact is pretty minimal. Right? But if we just talk about execution more broadly and zoom out. Right? We almost forgotten that this is a project business.

Saurabh Pant
Saurabh Pant
Analyst at Bank of America

Things can go wrong because you've done such a fantastic job at execution. Right? But maybe talk to your project selection process, the the the improvements in the P and C and the projects that are in your backlog. Maybe just give us a little more color on how you have managed to execute and and during these uncertain times, right, how you still manage to remain in control of the process.

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

Sure. Thank you, Saruvan. It's actually a great follow-up, you know, after Mark's question because, you know, the the difference for us is, you know, executing an iPCI two point o project has significantly lower risk than executing a non iEPCI, non two point zero project. So again, that's why we are in a very different world right now in terms of execution. By the way, it showed up in our free cash flow this quarter because of our ability to be able to really do things in a unique way and often in a very in a way that rewards both our clients in terms of project certainty, but also rewards us as well.

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

So there's no doubt, Saroob, that we think about execution every single day. We actually had our Board meeting on Tuesday, and our Board spent one hour in our subseal bayon looking at the execution work that we're doing today. And we're very we make things very visible, things that are going well, but also areas that we need to improve upon. But I can assure you that our execution, given the new model, the new operating model, allows us much greater transparency, the ability to be able to address issues much earlier in the process, which leads to greater project certainty. This is measured by the direct awards.

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

You know, a client would not give you a repeat direct award order if you did not deliver on time. So what you see from us is I cannot think of an instance. We have not gotten a subsequent direct award from a project if it went if it was a multiple phase project as an example because they see they they experience a success, and hence, we've had the opportunity to repeat that success. And, I guess the best example of that would be in Guyana, which we are very, very happy to be part of and thankful to ExxonMobil. But if you look at other some of the other work that's going on out there where they're attempting to do integrated projects, but they're not going so well, you're seeing those clients tender the follow-up phase.

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

That says that maybe that the execution that they're experiencing in the first phase was not as good as they had hoped it would be. And then sometimes we'll agree to tender and sometimes we won't agree to tender on the subsequent phase if we're asked to because of the performance of others. So look, I think it's very visible. The success is very visible. It's not me saying it.

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

It's what the market is saying and the way that they're awarding us with the repeat direct awards and 80% of our business being direct awarded to our company. We can't maintain that or we would not have achieved that and we can't maintain that if we're not executing at the very highest level. And I'll repeat just one more time. Certainty is what matters to our customers. Sure, there's the economic evaluation, but a big portion of that economic evaluation is the certainty of the delivery, and we have been doing an exemplary job.

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

And then, you know, put a shout out to the 22,000 women and men of the company who are executing these projects every single day.

Saurabh Pant
Saurabh Pant
Analyst at Bank of America

Yep. No. Absolutely. That that's that's fantastic to see, and it's visible in your numbers, right, that you report every quarter. So that's very helpful.

Saurabh Pant
Saurabh Pant
Analyst at Bank of America

And then a quick one, maybe as for you on the free cash flow guide. Obviously, it's fantastic to see the free cash flow guide for the full year being released, and first quarter was super strong. Right? Also part of that was working capital. Maybe spend a little time on working capital and just just talk to how much is that a part of your higher free cash flow guide for affiliates?

Alf Melin
Alf Melin
Executive VP & CFO at TechnipFMC

Yeah. Thank you, first of all, for recognizing the free cash flow performance. We're really pleased with the $380,000,000 that we generated. And I think just piggybacking what Doug mentioned touched on already in his prior comment here, it's really the strength of our business model overall that drives the free cash flow. So when you think about it first, when you look at something like the first quarter or going forward, foundational for us is the milestone payment terms that we have embedded in our backlog.

Alf Melin
Alf Melin
Executive VP & CFO at TechnipFMC

So it's fairly simple in a way. If you perform, then we achieve the milestones there. Not only are those milestones important to our clients and they get what they need, but we get cash. So that is really how we structure the contracts and everything that we do and what's embedded in our high quality backlog. I will also point out that both Subsea and Surface had very strong cash flow in the first quarter.

Alf Melin
Alf Melin
Executive VP & CFO at TechnipFMC

So, again, very pleased with the results. If you kind of then look at the rest of the year to some degree and think about, what we typically have had us a little bit weaker Q1, a little bit stronger Q4, we see a more balanced performance this year. So it will probably be fairly evenly balanced to get to, call it, the midpoint of the new guidance. And clearly, implies that for the full year, we'll have a little bit of a working capital net inflow that affects the financials. Obviously, again, with what we've just experienced in Q1 and looking out, we are really confident in the free cash flow and raised our guidance by €150,000,000 so now sitting at €150,000,000 above the prior guidance range.

Alf Melin
Alf Melin
Executive VP & CFO at TechnipFMC

And maybe last comment on this. You think about the underlying free cash flow conversion that we have. Even if you do not consider any, call it, variation in working capital, we are continuously trending well above 50% of conversion of free cash flow from EBITDA.

Saurabh Pant
Saurabh Pant
Analyst at Bank of America

Yep. No. That's a very good point. So I'll turn it back. And clearly, you deliver the project on time and the customers stay on time.

Saurabh Pant
Saurabh Pant
Analyst at Bank of America

So that's a fantastic setup. Thank you. I'll turn it back.

Operator

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

Marc Bianchi
Managing Director at TD Cowen

Hi, thank you. I guess we're seeing building evidence every quarter from you guys that you've got something that's differentiated here and value added for the customer. But you know, that you did mention in the press release that that commodity prices is a primary variable for the customer. So I'm just kind of curious, you know, at what level does commodity price weakness start to enter the conversation or maybe reduce the urgency for some of the customers?

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

Sure, Mark. Important question. As stated earlier, that has not entered into the conversation at this point. Again, keeping in mind that these are longer cycle projects and projects that once they are awarded, we've actually never had a project canceled or deferred that was in our backlog, including during COVID. So there's a lot of stability actually in this business because of the longer term nature of the investments that the clients are making.

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

Also keep in mind, we come at the very tail end, and that's not a bad thing in this case. In In other words, they've invested a tremendous amount of cash and capital in terms of acquiring the lease, doing the seismic, doing the exploration drilling, delineation drilling, etcetera. It's really the only thing that stands between us and them generating revenue or first oil or first gas is putting in place the production system, which is what we're delivering to them. So because of that, we're kind of in a unique position. If you and I don't really want to speak on behalf of our customers, but I think you'll find these numbers really across our customers numbers that they use across our customer base.

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

Honestly, it's really up to them to answer the question. But what they will typically say is their offshore portfolios have a sub $40 breakeven. And in some of the more prolific basins, it is sub 30. And then when you get into the brownfield tiebacks, it's sub 30. And in some cases, it's in you know, it can be in the low very low twenties.

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

So it's a very different setup than other areas and other investment opportunities that they have, which is why we continue to see a greater shift of the capital expenditures investment for future developments to be being preferentially treated or if you will, guided to the offshore versus the onshore, the land market. So that's kind of the setup. That's what we're seeing. Look, I am sure we're talking about it. They're talking about it.

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

Our clients are phenomenal and world class at what they do. So no suggestion that they're not talking about it, but certainly not showing up in any of their in any of the conversations that we're having. And again, they do have a breakeven that is much preferred to other investment opportunities that they have than they would have in their offshore opportunity set.

Marc Bianchi
Managing Director at TD Cowen

Yep. Yep. Makes sense. Thanks for that color, Doug. The other question I had was on Subsea Services.

Marc Bianchi
Managing Director at TD Cowen

It seems like the outlook is unchanged there. I would have thought that maybe if there's anywhere in Subsea business, maybe there's some commodity price sensitivity there, around, you know, just some of the the discretionary services that you might you might do. Has your outlook for Subsea Services changed at all in the last ninety days?

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

That's a good question. Actually, it's one of the more resilient parts of our portfolio. And again, it's I hate to keep reference reference it a second time, but even during COVID, our Subsea Services revenue was the most stable of any of our revenue streams within the company. There's not a lot of discretionary services that they do. Typically, we're involved because it's a normal inspection maintenance repair schedule or it may be something that happens in the wellbore itself.

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

More often or not, the issues occur in the wellbore. And that's just because over time, geochemistry changes, it may start to scale up, may start to get sand intrusion, they may have a sensor as or or or a valve or a screen fail down hole, and then they have to go in and do an intervention. That's why you know, that was one of the exciting things when we talked about riser less coil tubing intervention because that's kind of been a Holy Grail that's the industry has been working on for multiple decades actually. And we addressed that along with our technology partner Halliburton for the first time. So no, it's actually fairly stable.

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

Our outlook hasn't changed because there's just not a lot of discretionary. It's not like maintenance of, I don't know, onshore equipment or when it you really because of think about it, This equipment is sitting on the seabed. It you know, it you know, it's up to a mile up to two miles deep in the water. I mean, it's just it's it's something that you don't really defer maintenance on or it's not really discretionary. It's something that our clients are very good at maintaining.

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

And as a result of that, it's proven to be quite resilient again, even in the 2021 timeframe.

Marc Bianchi
Managing Director at TD Cowen

Very good. Thanks so much. I'll turn it back.

Operator

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

Scott Gruber
Scott Gruber
Director - Oilfield Services & Equipment Research at Citi

the project outlook list, there's a larger board for Petrobras listed simply as revitalization of fields. I think it showed up last quarter, but can you just provide some more color on that opportunity? Is it a bunch of step outs? Is there intervention component? Just what does that refer to?

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

Sure, Scott. Good morning. Look. Petrobras is a very, very sophisticated client. They've been operating in the subsea, you know, one of the longest operators in the subsea.

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

And they're very good at what they do. And they'll look at their asset base and if they see an opportunity to reconfigure, let's think of it as reconfiguring, reconfiguring the architecture, which would allow them to improve the recoverable from the reservoir, then that's something that they're willing to invest in. So I would say what you're seeing there is a very sophisticated, very mature subsea customer.

Scott Gruber
Scott Gruber
Director - Oilfield Services & Equipment Research at Citi

And does it involve new technology that they're looking at applying or just kind of field configuration?

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

So it could. You know? And and you know we were deploying some new technologies in Brazil right now. So those type of projects could include subsea processing technology, but not necessarily.

Scott Gruber
Scott Gruber
Director - Oilfield Services & Equipment Research at Citi

Okay. We'll we'll continue to watch. I had another kind of execution or efficiency question. As as you've shifted towards subsea two point o, you've been reconfiguring your plants. And based on past comments, you've been finding some surprising gains as you do so.

Scott Gruber
Scott Gruber
Director - Oilfield Services & Equipment Research at Citi

Where do you stand in that process? Does the plant reconfiguration occur in tandem with the product flow? Does it happen in anticipation of greater Subsea two point zero load? Just some color on kind of how you're reconfiguring the plants and the efficiency gains you're finding would be great.

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

And just to be clear, the converse you're you're quite you're asking about the physical manufacturing plants or the plans?

Scott Gruber
Scott Gruber
Director - Oilfield Services & Equipment Research at Citi

Well, the plan and was it the flow through the plant? You had some comments previously on, you know, you had some kind of No.

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

No. Good.

Scott Gruber
Scott Gruber
Director - Oilfield Services & Equipment Research at Citi

At each station, there's, like, targets for days, and you're beating them.

Scott Gruber
Scott Gruber
Director - Oilfield Services & Equipment Research at Citi

And just some of that color, I think, is interesting.

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

Yep. Got it. Thank you, Scott. I just didn't I I just wanna make sure I had heard clearly. No, this is a key portion this is a key element of the Subsea two point zero in the configured order.

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

And again, some of which showing up in the operating results of the company now is as we see more flow of the Subsea two point zero in the manufacturing facilities, we have a significant increase in the cadence or a shorter delivery times because of an increased cadence through the manufacturing facilities. And look, it continues to impress, I will even say to surprise me. We are learning as we go. It is making a profound is having a profound impact. Just got back from a trip through Brazil, Suriname and Guyana.

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

And in our Brazil plant, we're building a lot of the two point zero equipment. And when you see the flow in the cadence going through two point zero that's now being delivered to Guyana as well as projects in Brazil and in the future to Suriname. It really is just fascinating compared to some of the non two point zero as I talked about earlier. For instance, the Petrobras standard, which is not a two point zero configuration doesn't have the same flow or cadence that the Subsea two point zero has. That shows up in many different ways.

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

It obviously allows us to do more with less, I. E. Expand our capacity without spending capital on manufacturing infrastructure. But it's beyond that now. I was super impressed by the team.

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

They're finding ways to even within the Subsea two point zero architecture to improve the efficiency of manufacturing by manufacturing features, if you will, instead of product. So they'll do multiple features on multiple parts that all have the same profile, which means there's no stopping and rejigging the machine tools in between the various products that go through or across that machine. So look, we're just learning so much. We're honored to have some really smart people who are willing to do things differently and every day look for ways to improve. And as a result of that, with only a small portion of two point zero actually consuming our total manufacturing hours, it will increase because our orders have increased.

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

But today, it's still only maybe a third of our total manufacturing hours. The future remains very exciting and very bright for our company and our customers.

Scott Gruber
Scott Gruber
Director - Oilfield Services & Equipment Research at Citi

I appreciate the color. Thanks, Doug.

Operator

Our final question will come from the line of Victoria McCullough with RBC. Please go ahead.

Victoria McCulloch
Victoria McCulloch
Director at RBC Capital Markets

Hi there. Thanks very much. Just one question remaining for me today. We saw quite a wide range of pricing in some of the Petrobras awards in the start at the start of the year. Should obviously, the macro has changed quite a lot from that time.

Victoria McCulloch
Victoria McCulloch
Director at RBC Capital Markets

But just in terms of your thought that any read across we can take from that, Is that a reflection of some of the capacity constraints that you're dealing with sort of in sort of '25, '20 '6 or sort of a risk appetite that you approach some of these contracts with? Any color would be helpful. Thank you very much.

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

Sure. Thank you for the question. Look, you should all look. There's a very the market structure is very different than it used to be historically. You have very, you know, mature, disciplined companies that are, that left, if you will.

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

And therefore, you should expect to see a very disciplined approach. And as a result of that, I can assure you, you always see a disciplined approach from TechnipFMC. And we do look at the project in its totality. We don't look at it in terms of absorbing capacity. We look at it in terms of generating the returns that were required for our company.

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

And these are returns not just because we want these returns, it's returns that will allow us to continue to invest in technology, continue to improve our performance, but also to improve subsea project economics. Our customers respect that. Our customers understand that. We win, but they also win because they get projects delivered on time and on budget. And they're not getting that from the rest of the industry, and they certainly weren't getting that historically.

Douglas Pferdehirt
Douglas Pferdehirt
Chairman and Chief Executive Officer at TechnipFMC

So as long as we continue to generate a return that will allow us to reinvest, we'll continue to innovate, we'll continue to improve, reduce cycle time, which is the main component to improving Subsea project economics. They win, we win and that will continue to be our focus, which is a returns focus.

Victoria McCulloch
Victoria McCulloch
Director at RBC Capital Markets

Thanks. That's really helpful color.

Operator

I will now turn the call back over to Matt Seinzheimer for closing remarks.

Matt Seinsheimer
Matt Seinsheimer
Senior Vice President, Investor Relations and Corporate Development at TechnipFMC

This concludes our conference call. A replay of the call will be available on our website beginning at approximately three p. M. New York time today. If you have any further questions, please feel free to contact the Investor Relations team.

Matt Seinsheimer
Matt Seinsheimer
Senior Vice President, Investor Relations and Corporate Development at TechnipFMC

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

Operator

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

Executives
    • Matt Seinsheimer
      Matt Seinsheimer
      Senior Vice President, Investor Relations and Corporate Development
    • Douglas Pferdehirt
      Douglas Pferdehirt
      Chairman and Chief Executive Officer
    • Alf Melin
      Alf Melin
      Executive VP & CFO
Analysts
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Key Takeaways

  • TechnipFMC delivered a $2.2 billion Q1 revenue, $356 million adjusted EBITDA (15.9% margin ex-FX) and $380 million free cash flow, while total backlog rose 10% sequentially to $15.8 billion.
  • Subsea inbound orders reached $2.8 billion in Q1 (book-to-bill of 1.4), marking eight of the last nine quarters where orders exceeded revenue, highlighted by iEPCI awards for Johan Sverdrup Phase III and Shell’s Gato De Mato project.
  • The Subsea opportunity list now tops $26 billion (up 20% YoY) with growth in new frontiers like Suriname, Namibia and Mozambique, and over 80% of 2024 inbound was via direct iEPCI contracts and Subsea Services.
  • TechnipFMC reaffirmed its 2025 outlook with over $10 billion of expected Subsea inbound orders, unchanged full-year adjusted EBITDA guidance (~$1.76 billion ex-FX) and increased free cash flow forecast to €1.0–1.15 billion.
  • With 95% of 2025 revenue from markets outside U.S. land and mitigation actions in place, tariff exposure is limited to under €20 million of EBITDA, underscoring the company’s strong international resilience.
AI Generated. May Contain Errors.
Earnings Conference Call
TechnipFMC Q1 2025
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