TechnipFMC plc Ordinary Share Barclays 40th Annual Energy-Power Conference

Over the last four years, TechnipFMC has been far and away the best story in energy services. Trading at under $10, the stock is now up almost eight times since the period when upstream spending globally has been flat. They did it by establishing itself as the premier offshore equipment company, reshaping the subsea market and its integrated offering. An iEPCI approach has transformed the industry and structurally lowered costs for the deepwater development. The market has recognized the rarity of a capital equipment company having higher orders, revenue, and margins concurrently, and this window looks to be open for several more years. My pleasure to introduce Mr. Doug Pferdehirt, who has been CEO of TechnipFMC since 2016.

Thank you, Doug. Thank you, David.

Doug, a year ago, you sat here with your wind clearly at your back. The stock has now had quite a run since then. Expectations are sort of a different animal today. Can you think about managing that shift from being kind of a story that was sort of an interesting niche story to kind of really establishing yourself as a leader in there? How are you sort of approaching that now in terms of those expectations? Do you change anything here? Do you just continue the same way you have been going, or does it require a different approach?

Sure. I am not sure what you are feeling on your back right now, David, but I am feeling the same amount of wind or perhaps a bit more, just to play off of the first part of your question. Really, a year ago versus today, a whole lot of things have come together. I would say we feel more wind at our back today than we did a year ago. We have certainly proven more, both in terms of the market, the shift of capital flows to the offshore, our continued high level of execution, and now our ongoing development and extension of our offering through our industrialization journey. Honestly, it feels really, really good right now. We are obviously singularly focused on execution and making sure that we continue to execute at a very high level.

The team's done a tremendous job over the past year of delivering these projects, not on schedule, but ahead of schedule. Building further credibility, which leads to our customers putting more trust and confidence in us, and that's most reflected by the fact that 80% of our business is now direct awarded to our company. It never sees any sort of a competitive environment or a bidding environment. It's direct awarded, and that's hard to achieve, and it's certainly something we're focused on every single day to ensure that we continue to deliver to our clients' expectations. Yes, there's higher expectations from the market. There's higher expectations from our clients, and there should be. But rest assured, nobody puts more pressure on themselves or puts a higher expectation on themselves than the 22,000 women and men at TechnipFMC.

Over those last four years, your orders have been kind of around that $10 billion level, have been growing, yet FIDs have been going down over that same time. Can you just help us understand a little bit how that math works for FTI? Is it just this direct award approach? Is it iEPCI? Is it all of the above?

Yeah. How can investors sort of understand that?

Yeah. No, I think to really appreciate kind of the composition of the inbound is you have to start with looking at the market position. We have over 50% of the world's installed base on the seafloor. We have massive amounts of equipment, but also very advanced equipment that is sitting anywhere from a few hundred meters to up to 2 miles deep in the ocean. This is where no person can go, so it's all very, very advanced materials. It's all controlled by advanced automation and control, some of the most advanced automation and control in the world today. We partner with NASA in terms of our control systems, and then it's all manipulated by either resident robotics or remote robotics. You've got this combination of things going on, managing not just a single piece of equipment.

You have to appreciate what we're putting down there. It would look like a gathering system. There's all sorts of different things on the seafloor that we put to ensure that the hydrocarbon can be developed both economically and safely over a 25 to a 30-year lifetime in a very harsh condition. You're obviously in a saline environment, controlling wellbore fluids versus a very cold ambient temperature on the seafloor. It's exciting. That gives us somewhat of an annuity, not only from our subsea services business, which is now a $2 billion business, OEM model. We service 100% of our equipment. We get these 20 to 30-year service contracts. But also as customers look to add incremental production or add incremental wells, because we have such a large presence, that is typically direct awarded directly to our company.

What you've seen is a very, very resilient amount of activity that hasn't been dependent upon large project FIDs. There have been some in that period of time, but to your point, not the same cadence as we had experienced previously or will experience over the coming years through the end of the decade.

Leading into that, I thought on your last call that probably the most important thing you had talked about was the outlook for next year and that we're now seeing large greenfield awards. What's changed in your view? That seemed to me kind of an important distinction.

Well, the big change, and the reason that I made that comment on the call, was the question was about what gives you the confidence to be able to call an inflection in your inbound through the end of the decade? Not a lot of companies are in a position to do that. We have visibility that is really unique in that we have these long-term partner relationships with our clients that are exclusive in nature and allow us to have access to information one year, two years in advance of it becoming public knowledge or knowledge in the public market. Because we're working with them. We start as an architect. We're the architect, we're the builder, and we're the service company. We're all of those now, post the merger.

In the architectural phase, just as you would if you were building a home, you start that years or more before you engage the contractor to actually build or construct what you want to construct. We are privileged to be, and honored to be in that position, where we're sitting there as they're looking at different assets, potentially where they're going to invest their money, and how they're going to invest their money, and with whom they're going to invest their money. Being at the table obviously gives us insight and a significant advantage. From that, we have visibility that quite frankly is unique, and we haven't always had that as a company. We've built that over time, and certainly we're in a very privileged position as we sit here today. In addition to that, what we offer to our customers is unique.

No one else offers to the market what we can offer to the market. As a result of that, they're seeing a benefit. The benefit that they see is a reduction of cycle time or acceleration of time to first oil. That's a big driver because offshore projects are longer cycle projects, and if you can accelerate the time to first oil, you can significantly improve the project returns. In addition to that, what they're looking for is certainty. Certainty in the outcome. If you're going to make a large capital investment, personally or through your company, you want to know the result. You want to know you're working with somebody who's going to deliver to the standard that you've agreed to. That's who TechnipFMC is, and we've proven that time and time again. This has actually changed our customers' behavior.