Technipfmc Plc · NYSE:FTI
Technipfmc — Investor Presentation (November 2019)
70 slides from Technipfmc's investor presentation, November 2019
Slide 1: Investor Relations Overview
Investor Relations Overview November 2019
Slide 2: Disclaimer
Disclaimer Forward-looking statements We would like to caution you with respect to any “Forward-looking statements” made in this presentation as defined in Section 27A of the United States Securities Act of 1933, as amended, and Section 21E of the United States Securities Exchange Act of 1934, as am
Slide 3: Contents
Contents 1 Q3 2019 Financial and operational highlights 2 Reshaping Our Future 3 Company overview
Slide 4: Q3 2019 Financial and operational highlights
Section 1: Q3 2019 Financial and operational highlights Investor Relations Overview | 4
Slide 5: Reshaping Our Future from a position of strength
Reshaping Our Future from a position of strength RemainCo (TechnipFMC) Confident in the timing of our transaction Subsea leadership position extended through integrated model – iEPCI™ a fully-integrated technology and services provider, continuing to drive energy development Onshore/Offshore success
Slide 6: Reshaping Our Future with the right business mix
Reshaping Our Future with the right business mix RemainCo – International, subsea play RemainCo revenue1,2 Trailing 12-Months • Almost 90% of RemainCo revenue generated outside the U.S. and Canada • Subsea levered to emerging markets (Mozambique, Guyana) and established regions (Brazil, North Sea, G
Slide 7: Reshaping Our Future as leaders of distinct peer groups
Reshaping Our Future as leaders of distinct peer groups RemainCo peer group5 SpinCo peer group5 Market Market cap4 Subsea Surface cap4 Equity Equity LNG Process Projects Services Products ticker1 2020 ticker1 2020 capabilities technologies EBITDA SURF/ EBITDA iEPCI™ SPS Services Equipment Services m
Slide 8: Subsea orders driven by differentiation, strong outlook
Subsea orders driven by differentiation, strong outlook Q3 Subsea orders = $1.5 billion iEPCI™ Services HP/HT Subsea iEPCI™ Order growth YTD Subsea services Order growth YTD 50%+ order growth >90% +17% in 2019e driven by iEPCI™, services and new technologies • Award value almost • Subsea services •
Slide 9: Energy transition supports further LNG project sanctioning
Energy transition supports further LNG project sanctioning Awarded to consortium led by TechnipFMC Arctic LNG 2 Projects sanctioned since June 2019 Scope awarded, FID pending Calcasieu Pass LNG Mozambique LNG (Area 1) Nigeria LNG Train 7 LNG outlook LNG project sanctioning continues despite weakne
Slide 10: Q3 2019 Company results
Q3 2019 Company results Revenue $3.3 billion OTHER ITEMS After-tax charges and (credits) impacting EBITDA of Adjusted EBITDA1 $32.6 million, or $0.07 per diluted share $379.2 million Corporate expense of $110.6 million, excluding charges and (credits); includes $53.2 million, or $0.09 per dilute
Slide 11: Q3 2019 Segment results
Q3 2019 Segment results Subsea Onshore/Offshore Surface Technologies USD, in millions USD, in millions USD, in millions +11% -520 bps +4% +430 bps -1% -680 bps 19.1% 18.0% 1,342 15.6% 1,596 402 397 1,533 1,209 14.8% 11.2% 10.4% Revenue Adjusted EBITDA margin Revenue Adjusted EBITDA margin Revenue Ad
Slide 12: Positive operating cash flow in line with expectations
Positive operating cash flow in line with expectations Operating cash flow Q3 2019 Cash flow walk (in $ millions) 159 (in $ millions) 141 121 92 74 4,621 3Q18 4Q18 1Q19 2Q19 3Q19 4,504 Q3 2019 Items of note Positive operating cash flow ▪ Q3: $92 million, YTD 2019: $288 million ▪ Includes $167 mill
Slide 13: Yamal LNG – Interpreting the disclosures
Yamal LNG – Interpreting the disclosures Project disclosure data Contract liabilities structure Reduction in contract liabilities: $284m June 30, 2019 to September 30, 2019 Payments to Vendors or JV partners Vendor Joint Venture (cost) (profit) Continued strong execution 50% 50% and plant performanc
Slide 14: Summary
Summary Company highlights Subsea book-to-bill of 1.7 year-to-date reflects continued strength of iEPCI™ Strong profitability in Onshore/Offshore driven by Yamal LNG contribution and robust execution across portfolio Surface Technologies’ international revenues expected to grow at low double d
Slide 15: Reshaping Our Future
Section 2: Reshaping Our Future Investor Relations Overview | 15
Slide 16: Successful merger and outstanding performance
Merger extended subsea leadership with integrated model • Redefined subsea economics resulting in a transformation of the industry • iEPCI™ model has become the industry standard • Advanced technology development and innovation across a broader scope Successful merger and outstanding performance Ons
Slide 17: Creating two diversified pure-play market leaders
Creating two diversified pure-play market leaders RemainCo SpinCo • Proven winning strategy for Subsea • Will capitalize on operational performance and strength in backlog • Greater opportunity for integration in surface production • Leadership in LNG; opportunities in biofuels, green chemistry and
Slide 18: Transaction summary
Transaction summary Creating two diversified pure‐play market leaders: • SpinCo, a leading E&C player, poised to capitalize on the global energy transition • RemainCo, a fully-integrated technology and services provider, continuing to drive energy development Pursuing tax free spin of SpinCo for cer
Slide 19: TechnipFMC – Creating two undisputed industry leaders
TechnipFMC – Creating two undisputed industry leaders RemainCo SpinCo Unlocking value, realizing potential Capitalizing on structural growth trends Revenue: $7 billion1,2 Revenue: $6 billion1,2 Backlog: $10 billion1,3 Backlog: $19 billion1,3 Listings: NYSE, Euronext Paris Listing: Euronext Paris HQ:
Slide 20: Distinct business profiles
Distinct business profiles RemainCo SpinCo Customers Upstream focus Midstream/Downstream leverage Capital intensity Medium Low Investment horizon (cycle) Medium Long Services opportunity Very High Medium ROIC potential High Very High Each company will have distinct investment appeal Investor Relatio
Slide 21: Creating two industry leaders
Distinct and compelling Unique business profiles market opportunities with differentiated Creating two investment appeal industry leaders Strong balance sheets Focus, agility and and tailored capital strategic flexibility structures Continuing to reshape the energy industry and create value for all
Slide 22: SpinCo
SpinCo Investor Relations Overview | 22 Investor Relations Overview | 22
Slide 23: A differentiated E&C leader
A differentiated E&C leader Company overview World-class execution supported by highly experienced engineers $19B >20% >25 Leading market positions Backlog Of operating Leading proprietary LNG capacity1 technologies Unrivaled product and technology portfolios Demonstrated ability to manage the most
Slide 24: Leadership team
Leadership team Catherine MacGregor Bruno Vibert Marco Villa CEO-elect CFO-elect COO-elect 23 years of international experience with Schlumberger 5 years with TechnipFMC and more than 20 years of 25 years with TechnipFMC and more than 30 years of international experience in finance, public accountin
Slide 25: Market outlook
Market outlook Gas Liquids Total gas demand: Total liquids demand: Bcm Crude, condensate and natural gas liquids; MMb/d 108 4,468 104 SpinCo is 98 positioned at each 16% 3,922 15% 19% major step of 3,652 11% Chemicals 14% hydrocarbon LNG 11% transformation Other Sectors chain 2017 2022e 2035e 2017 2
Slide 26: Growth potential driven by LNG market leadership
Growth potential driven by LNG market leadership Market leadership Diversity in projects and technologies 105 Mtpa >20% 7.8 Mtpa Pioneer in modularization • Onshore LNG trains on an unprecedented scale Global production Of operating LNG World’s largest delivered capacity LNG trains • Greater cost an
Slide 27: A diversified pure-play with extensive capabilities
A diversified pure-play with extensive capabilities Projects Services • LNG • Gas monetization • Feasibility studies • Floating LNG • Refining • Consulting • Fixed and • Ethylene, • Project management consultancy floating platforms petrochemicals Process Technology Products • Ethylene • Petrochemica
Slide 28: Proven disciplined operating model
Proven disciplined operating model Risk and safety management Early engagement Consistency in financial performance Project selectivity Technology and innovation Best-in-class profitability though the cycle Project execution Investor Relations Overview | 28 Investor Relations Overview | 28
Slide 29: Well-positioned for the energy transition
Well-positioned for the energy transition Gas and green chemistry – a platform for sustainable growth Gas Green Chemistry A fundamental role to A structural play in the transition growth opportunity Gas Processing Top 3 Biological Biofuels Components Biopolymers LNG Leader Circular Plastics Chemistr
Slide 30: Building blocks for incremental growth
Building blocks for incremental growth Installed base Digital twin Services maintenance Revamp project opportunities opportunities Service and project opportunities driven by digital capabilities Investor Relations Overview | 30 Investor Relations Overview | 30
Slide 31: SpinCo – a compelling investment opportunity
SpinCo – a compelling investment opportunity A global leader in E&C Proven, differentiated Attractive financial • Diversified pure-play with project execution attributes undisputed leadership positions • Early engagement and strong • Sector leading and consistent in major end markets risk management
Slide 32: RemainCo
RemainCo Investor Relations Overview | 32 Investor Relations Overview | 32
Slide 33: An integrated production-focused leader
An integrated production-focused leader Company overview Pioneered proven fully-integrated Subsea model delivering sustainable improvements in project economics $10B #1 #1 Backlog iEPCI™ Precision robotics Implementing Subsea model in surface production to drive similar success Uniquely positioned f
Slide 34: Positioned to meet growing demand
Positioned to meet growing demand Liquids production Crude, condensate and natural gas liquids; MMb/d 100 16 108 • 49MMb/d of new liquids 13 production is required to meet 41 expected demand 20 • 20MMb/d is expected to come from offshore • 13MMb/d is expected to come from Shale oil 2018 Net Decline
Slide 35: Positioned to meet growing demand
49MMb/d of new liquids production is Positioned to meet growing demand required to meet expected demand Liquids production Crude, condensate and natural gas liquids; MMb/d Offshore 108 • Subsea industry leader 16 100 • Proven success with integrated 13 subsea commercial model 41 • Differentiated by
Slide 36: Supporting the supply of gas for LNG
Supporting the supply of gas for LNG Gas production Bcm 943 • 45% of new gas production is expected to come from offshore 881 683 sources • Onshore gas will primarily supply 4,460 pipeline flows or be consumed 3,715 near source • Offshore gas will primarily supply LNG flows 2018 Net decline Offshore
Slide 37: iEPCI – The industry standard
iEPCI™ – The industry standard iEPCI™ is a structural transformation iEPCI™ acceleration Integrated awards to TechnipFMC are growing in both value and as a percentage of Subsea orders $3B+ iEPCI™ awards as of August 26, 2019 $3 60% 50% $2 $1 40% 30% 20% 11 5 5 10% New Repeat New $0 0% 2016 2017 2018
Slide 38: Unique drivers of revenue growth
Unique drivers of revenue growth Services Alliance partners CAGR = 12+% 2018 2020e • Diversified, growing revenue base that exceeds $1billion • Long-term, mutually beneficial relationships • Resilient, margin-accretive aftermarket services • iEPCI™ alliances utilize full integrated offering • Servic
Slide 39: iProduction leadership
iProduction™ leadership Subsea Surface Technologies Proven playbook Significant opportunity • iEPCI™ • Integrated commercial model • Subsea 2.0™ • Technology transfer from Subsea • Alliances • Alliances Commercial model Technology 60% Market capital expenditures for surface >2x that of subsea 50% Cl
Slide 40: Technology leadership
Technology leadership Integration technologies Digital and automation Robotics NextGen Precision Subsea 2.0™ subsea controls robotics for ROV Surface production Subsea iProduction™ automation mechatronics Using differentiated technologies to Applying Subsea digital and Utilizing mechatronics to tran
Slide 41: RemainCo – applying integrated model to drive further value
RemainCo – applying integrated model to drive further value A global leader A differentiated strategy Attractive financial • Diversified pure-play uniquely • Extending market adoption of attributes positioned to capitalize on growth integrated model through • Growth opportunity for both in deepwater
Slide 42: Creating two industry leaders
Distinct and compelling Unique business profiles market opportunities with differentiated Creating two investment appeal industry leaders Strong balance sheets Focus, agility and and tailored capital strategic flexibility structures Continuing to reshape the energy industry and create value for all
Slide 43: Company overview
Section 3: Company overview Investor Relations Overview | 43
Slide 44: TechnipFMC snapshot
TechnipFMC snapshot 1 2 $12B Integrated solutions Stock exchange Total company market provider for the oil and listings – NYSE capitalization1 gas industry and Euronext Paris $13B $24B $5B Total company Total company Total company cash revenue2 backlog3 balance4 1 Public market quote from Bloomberg,
Slide 45: Broadest portfolio of solutions for the oil & gas industry
Broadest portfolio of solutions for the oil & gas industry ONSHORE/OFFSHORE ▪ Onshore facilities related to the production, treatment and transportation of crude oil and natural gas, as well as transformation of petrochemicals such as ethylene, polymers and fertilizers ▪ Combines engineering, procur
Slide 46: Portfolio leverage to major energy growth platforms
Portfolio leverage to major energy growth platforms Subsea LNG Unconventional Product iEPCI™ >105 Mtpa reliability Transforming subsea Global production Leading positions in project economics delivered several products Subsea 2.0™ Revolutionary product 7.8 Mtpa Technology World’s largest LNG Extendi
Slide 47: Subsea competitive strengths
Subsea competitive strengths Market leading positions built Differentiated offering of Technology advancements to upon innovation and deep integrated products, services: drive greater efficiency and industry knowledge iFEED™, iEPCI™ and iLoF™ simplification Subsea Production FEED Studies Flexibles U
Slide 48: SPS / SURF - critical components of offshore development
SPS / SURF - critical components of offshore development Oil Strong history of & gas industry has strong history SPS / SURF is one of the largest subseatree of subsea treeorders orders components of project costs Subsea tree orders by region 2006-2019 YTD (trees) 600 551 Drilling / Well SPS / SURF C
Slide 49: Improving project economics for deepwater projects
Improving project economics for deepwater projects More than 400 deepwater discoveries 500 have yet to be developed 410 Projects 400 Good progress on deepwater cost reductions with potential for additional 300 savings +40% to 60% 200 Standardization, technology and strong project execution can
Slide 50: Subsea offers a full suite of capabilities
Subsea offers a full suite of capabilities Conceptual Design Life-of-Field Project Execution & FEED1 and Maintenance Engineering Procurement Equipment Construction Installation supply Maximized Unique asset Rationalized subsea reliability and architecture Joint SPS+SURF R&D Shortened time to first a
Slide 51: Subsea – integrated approach redefining subsea project economics
Subsea – integrated approach redefining subsea project economics Traditional approach Enhancements Key benefits One global contractor Reduced material costs Integrated procurement Simplified equipment set-up Optimized subsea architecture Fewer subsea production Optimized flow assurance
Slide 52: Making subsea short-cycle with Subsea 2.0 + iEPCI
Subsea – making subsea short-cycle with Subsea 2.0™ + iEPCI™ Subsea 6 month Break-even Shell Kaikias iEPCI™ schedule price 2.0™ reduction <$30/bbl TechnipFMC is changing the subsea paradigm from a long-cycle to a short-cycle business, using Subsea 2.0™ and a truly integrated approach (iEPCI™) to fie
Slide 53: Onshore/Offshore competitive strengths
Onshore/Offshore competitive strengths A market leader, notably in the Balanced portfolio of projects, Mega-project capability, areas of gas and downstream clients, geographies, and contracts world class execution Offshore Onshore Floating Fixed Platforms FLNG LNG Ethylene Refining Petrochemicals Pl
Slide 54: Onshore/Offshore – differentiated growth opportunities
Onshore/Offshore – differentiated growth opportunities Process Technologies / PMC LNG Rising demand for petrochemicals Improving market dynamics ▪ Favorable feedstock to product differentials ▪ Rising FEED activity ▪ Technology definition and selection activity ▪ Increasing tendering opportuniti
Slide 55: Onshore/Offshore – industry leading financial performance
Onshore/Offshore – industry leading financial performance Differentiated operating model 2011-2019e Adjusted EBITDA Margin1 delivering outperformance 18% 15% • Early engagement 12% • Project selectivity 9% • Technology and innovation • Risk management 6% • Project execution 3% 0% 2011 2012 2013 2014
Slide 56: Surface Technologies competitive strengths
Surface Technologies competitive strengths Leading market positions in Delivering technology that Integrated offering delivers up several niche product offerings extends asset life, improves to $1m in savings per well, returns creates unique growth platform Wellhead Flowline Frac, Flowback and Pumps
Slide 57: Comprehensive offering – from concept to project delivery and beyond
Comprehensive offering – from concept to project delivery and beyond A unique global leader in oil and gas projects, technologies, systems and services Subsea Onshore/Offshore Surface Subsea products Project management, proprietary ‣ Drilling, completion and production ‣ Trees, manifolds, control, t
Slide 58: Appendix
Appendix
Slide 59: Glossary
Glossary Term Definition Term Definition Bcm Billion Cubic Meters per Annum NAM North America CAGR Compound Annual Growth Rate ROIC Return on Invested Capital E&C Engineering and Construction ROV Remotely Operated Vehicles FID Final Investment Decision ROW Rest of World FLNG Floating LNG GOM Gulf of
Slide 60: 2019 Financial guidance
2019 Financial guidance1 *Updated October 23, 2019 Subsea Onshore/Offshore Surface Technologies Revenue in a range of $5.6–5.8 billion Revenue in a range of $6.0–6.3 billion Revenue in a range of $1.6–1.7 billion EBITDA margin at least 11.5% EBITDA margin at least 16.5% EBITDA margin at
Slide 61: Backlog visibility
Backlog visibility Subsea 1 3Q 2019 Inbound orders: $1,510 million 2 Non-consolidated Backlog $8.7 billion $4.3 billion Subsea $1.4 billion $3.0 billion 3 2019 2020 2021 & beyond 2019 $41 million 1 Backlog does not capture all revenue potential for subsea services. 2020 $138 million 2021+ $663 milli
Slide 62: 3Q19 Updates: Subsea opportunities in the next 24 months
3Q19 Updates: Subsea opportunities in the next 24 months1 PROJECT UPDATES Added Removed Shell TOTAL Gato do Mato Lapa NE Total INPEX North Platte Ichthys 2a PETRONAS Kelidang $250M to $500M $500M to $1,000M above $1,000M 1October 2019 update; project value ranges reflect potential subsea scope *Valu
Slide 63: Select financial data
Select financial data Three Months Ended Three Months Ended Revenue September 30, 2019 June 30, 2019 March 31, 2019 December 31, 2018 September 30, 2018 Inbound Orders (1) September 30, 2019 June 30, 2019 March 31, 2019 December 31, 2018 September 30, 2018 Subsea $ 1,342.2 $ 1,508.7 $ 1,185.3 $ 1,23
Slide 64: Inbound orders reconciliation
Inbound orders reconciliation TechnipFMC Inbound Orders in $ millions, unaudited Inbound Orders 2014 2015 2016 2017 2018 2019 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Exchange rate 1.37 1.37 1.33 1.25 1.13 1.11 1.11 1.10 1.10 1.13 1.12 1.08 Technip Subsea1 2,818 3,070 1,6
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Slide 70: Investor Relations contacts
Investor Relations contacts Matthew Seinsheimer James Davis Phillip Lindsay Vice President, Investor Relations Senior Manager, Investor Relations Director, Investor Relations (Europe) Tel.: +1 281 260 3665 Tel.: +1 281 260 3665 Tel.: +44 (0) 20 3429 3929 Email: InvestorRelations@TechnipFMC.com Email