Good day. My name is Lisa, and I will be your conference operator today. At this time, I would like to welcome everyone to the TechnipFMC Third Quarter 2021 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 session. Thank you. I would now like to turn the call over to Mr. Matt Seinsheimer. Please go ahead, sir.

Thank you, Lisa. Good morning and good afternoon, and welcome to TechnipFMC's third quarter 2021 earnings conference call. Our news release and financial statements issued yesterday can be found on our website. I’d like to caution you with respect to any forward-looking statements made during this call. Although these forward-looking statements are based on our current expectations, beliefs and assumptions regarding future developments and business conditions, they are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed in or implied by these statements. Known material factors that could cause our actual results to differ from our projected results are described in our most recent 10-K, most recent 10-Q and other periodic filings with the U.S. Securities and Exchange Commission and the French AMF. We wish to caution you not to place undue reliance on any forward-looking statements, which speak only as of the date hereof. We undertake no obligation to publicly update or revise any of our forward-looking statements after the date they are made, whether as a result of new information, future events, or otherwise. I will now turn the call over to Doug Pferdehirt, TechnipFMC's Chairman and Chief Executive Officer.

Thank you, Matt. Good morning and good afternoon. Thank you all for participating in today’s call. Joining me today is Alf Melin, our Chief Financial Officer. Results in the quarter reflect continued strength in operational performance and further support our confidence in achieving full-year financial guidance. Total company revenue in the period was $1.6 billion. Total company adjusted EBITDA was $141 million, with an adjusted EBITDA margin of 8.9%. Total company inbound orders in the quarter were $1.3 billion. Subsea inbound orders were $1.1 billion, bringing the year-to-date segment total to $3.9 billion. The strength of our inbound in the quarter was driven by direct awards, subsea services, alliance partners, and several long-term vessel charters. Additionally, our Subsea Opportunity List expanded for the fourth consecutive quarter and now shows project opportunities totaling $19 billion for potential award over the next 24 months when assuming the midpoint of the project ranges. Inbound orders for Surface Technologies were $250 million in the third quarter. It is important to note that we expect a significant increase in order activity in the fourth quarter, as we anticipate several multiyear awards will be made in the Middle East. Subsea inbound growth in 2021 partly reflects the momentum we are seeing in Brazil. This has always been an important region for TechnipFMC. We have been present in the country for over five decades, with a well-established supply chain and over 98% local content, contributing significantly to our success. Additionally, an important part of our global research and development is carried out at our technology center in Rio de Janeiro. This year, our Brazil teams have achieved several impressive milestones. We received two contract awards from Petrobras, the first for the Marlim and Voador Fields, where we will provide subsea manifolds, utilizing our second-generation all-electric Robotic Valve Controller. And the second award to supply equipment and services for the Búzios 6-9 fields, extending our backlog well beyond the first scheduled delivery in 2023. Karoon Energy awarded us with our first iEPCI project in Brazil, another significant step in the global adoption of our integrated model. And we delivered our 700th tree manufactured in country, reflecting a leadership position that has been built upon a long history of innovation and strong project execution. During the quarter, we also signed three long-term vessel charter contracts with Petrobras. These awards will serve the Brazilian market for the next three plus years. The first two charters were for pipelay support vessels owned and operated through our joint venture with DOF Subsea. The third was for a wholly owned vessel that provides us with the ability to install flexible pipe in any water depth up to 3,000 meters, and one that has consistently been awarded the clients' highest rating for operational performance, quality of work and health, safety and environment. These awards also serve as a leading indicator of the strong demand for the flexible pipe market in Brazil. For decades, flexible pipe has been the preferred solution in Brazil. The pipe's versatility has allowed the technology to evolve with the industry, adapting from shallow water to deep and ultra-deep water. TechnipFMC has been a pioneer in flexible since the early 1970s. We are constantly improving quality and reliability in increasingly harsh environments, and our Acu facility is a showcase for advanced manufacturing automation. More than 11,000 kilometers have been installed across the region, more than half of which were supplied by TechnipFMC, and we remain the market leader today. High concentrations of CO2 in pre-salt fields have posed industry challenges for some applications of flexible pipe, particularly pre-salt gas injection risers, leading to a reduction in flexible volumes since the market peak in 2017. Outside of these limited applications, the low CO2 flexible market in Brazil remains robust, supported by recent industry awards and tendering activity, which we believe will result in annualized volumes over the next three years that are more than double the current levels. In 2018, to address the high CO2 industry challenge, we created a strategic alliance and made a minority investment in Magma Global, a leader in advanced composite technologies. With the ongoing success of this technology alliance, we were pleased to announce we acquired the remaining interest in Magma, and we are excited to welcome them to the TechnipFMC family. By combining their proprietary technology with our flexible pipe, we are advancing the development of a hybrid flexible pipe solution for use in the Brazilian pre-salt fields. Our long history in Brazil, our research capabilities, our investment in disruptive technologies, our leadership in flexible, our high-performing fleet, and most notably the women and men that continue to drive our success positions us well in what is expected to be the strongest subsea market this decade. We have previously outlined our focus areas of wind, wave, hydrogen, and carbon transportation and storage. We are making real progress in all of these areas. Additionally, we believe that composite technologies from Magma will be a critical enabler to the new energy transportation systems. We were also pleased to announce a long-term strategic alliance with Talos Energy to develop and deliver solutions for carbon capture and storage, or CCS. This is an important step for both companies, combining Talos' offshore operational strength and subsurface experience with our long history in subsea engineering, system integration, and automation and control. The alliance will initially focus on the U.S. Gulf Coast, which is a major source of CO2 emissions with a heavy concentration of refineries, liquefied natural gas plants, and emerging blue hydrogen facilities. The alliance provides a platform to address this growing market need, and we look forward to working with Talos in the conversion of these identified opportunities. This type of collaboration, innovation, and integration will position TechnipFMC to be a leading provider in carbon transportation and storage. I will now turn the call over to Alf to discuss our financial results.

Thank you, Doug. We had another solid quarter, led by total company inbound orders of $1.4 billion. Revenue in the quarter was $1.6 billion, with adjusted EBITDA of $141 million. Total company backlog was $7 billion at the end of the period. Backlog for Subsea stands at $6.7 billion, of which just over $5.7 billion is scheduled for execution beyond 2021. We ended the quarter with cash and cash equivalents of $1 billion and net debt of $1.2 billion. During the quarter, we recognized charges and credits that netted to an expense of $16 million, which included the following items. Expenses totaling $44 million related to impairment, restructuring, and other charges, primarily related to a $37 million non-cash impairment to our initial investment in Magma Global. These items were partially offset by income of $29 million on our equity ownership in Technip Energies, which primarily relates to the favorable change in market value during the period. Loss from continuing operations was $0.09 per diluted share in the quarter. When excluding the impact of charges and credits that netted to an after-tax expense of $0.03 per share, the adjusted loss from continuing operations per share was $0.06. The adjusted loss from continuing operations also included the following items; a loss on an early extinguishment of debt of $16 million and a foreign exchange loss of $6 million. Now, let me turn to the segment results. I will focus on our sequential performance comparing the third quarter to our second quarter results. In Subsea, revenue of $1.3 billion decreased 6%, driven by lower activity in the North Sea and Asia. Adjusted EBITDA was $141 million, with an adjusted EBITDA margin of 11.2%, a sequential increase of 10 basis points despite the revenue decline. Inbound orders were $1.1 billion in the period, demonstrating our continued commercial success. In Surface Technologies, third quarter revenue of $267 million decreased 3% from the second quarter. Revenue decreased primarily due to the timing of large multi-year international awards, partially offset by increased revenue in North America. The continued growth in North America was driven by higher drilling and completion activity. Adjusted EBITDA was $28 million. Adjusted EBITDA margin was 10.6%, a decrease of 40 basis points from the second quarter driven largely by lower segment revenue. Inbound orders for the quarter were $250 million. Turning to corporate and other items in the period. Corporate expense was $29 million. We incurred a $6 million loss in foreign exchange. Net interest expense was $39 million. And lastly, tax expense came in at $12 million for the quarter. Cash from continuing operations was $136 million, with capital expenditures totaling $47 million. This resulted in free cash flow of $89 million in the third quarter. Free cash flow from continuing operations for the first nine months of the year was $100 million, and we are on track to meet our full-year free cash flow guidance of $120 million to $220 million. Cash flow in the quarter benefited from solid working capital inflows, which was in line with the commentary we provided on our second-quarter earnings call. Capital expenditures are anticipated to increase from the third-quarter level, largely driven by previously announced project awards in Subsea. We continue to see the potential for full-year expenditures to come in below our guidance of approximately $250 million. In the third quarter, we made significant progress in the monetization of our remaining stake in Technip Energies, announcing sales totaling 34 million shares of Technip Energies in multiple transactions. We received proceeds of $326 million in the quarter from the portion of the sales, with the remaining sale transaction scheduled for settlement before the end of October for proceeds of approximately $115 million. Upon completion of these sales, we will have reduced our ownership in Technip Energies by 75% and will retain a 12% stake, which is currently valued at more than $350 million. There is no lockup associated with our remaining position. During the quarter, we purchased $164 million of our 6.5% senior notes due 2026, the highest coupon debt within our capital structure through a tender offer. Regarding investment activity, we acquired the remaining 49% of shares in TIOS, our joint venture with Island Offshore for $49 million during the quarter. This transaction brings to the company additional subsea expertise that will enhance our life of field services capabilities and provide a complete range of wealth services to our clients globally. And as Doug mentioned in his remarks, we also acquired the remaining shares of Magma Global in early October for $64 million. As a reminder, we entered into a collaboration agreement with Magma in 2018, which included the purchase of a 25% ownership stake. As a result of the acquisition, we recorded a non-cash impairment in the third quarter to our initial Magma investment, reflecting the purchase price paid for the remaining stake. The cash consideration will be paid to shareholders on Magma in three installments. Let me close by highlighting a few takeaways from the quarter. We delivered solid operational performance in the period with total company adjusted EBITDA of $141 million and free cash flow from continuing operations of $89 million. Given these results, we are confident that we will meet our financial guidance for 2021. Additionally, the free cash flow generation of our business and ongoing monetization of our ownership stake in Technip Energies are supporting several important objectives. First, to improve our capital structure, which we demonstrated during the quarter with a $400 million reduction of net debt as well as $185 million reduction of short and long-term debt. Second, to maintain the flexibility to invest in our future, which we have also demonstrated with strategic investments in TIOS and Magma. I will now turn the call back over to Doug for his closing remarks.

Thank you, Alf. Before we move to Q&A, I want to close with a few remarks. Our third quarter results reflect a continuation of the strong operational performance that we demonstrated over the first half of the year, as Alf stated. We remain very confident in achieving our full-year financial guidance. Subsea orders have nearly matched the $4 billion inbound in all of 2020, and we remain on track to achieve solid double-digit growth. The acquisition of Magma and our strategic alliance with Talos serve tangible progress and further demonstrate the impactful role we will play in the energy transition. Finally, I would like to remind everyone that on Tuesday, November 16, we will host our Analyst Day. During the event, we will demonstrate how we are leveraging and extending our core competencies of innovation, integration, and collaboration to develop both new and novel energy resources offshore. We will provide updates on how we are using new commercial models and new technologies to further improve project economics and reduce carbon intensity in our conventional business while also transforming the way we fundamentally operate today. We will also have real examples on display to show you how TechnipFMC continues to drive change in the energy industry, and we hope to see you all there. Operator, you may now open the line for questions.

Your first question comes from the line of Arun Jayaram with JPMorgan Chase.

Yes. Good morning. My first question is for Alf. I wanted to talk a little bit about the balance sheet improvement. You talked about $185 million of debt reduction, and I just wanted to get your thoughts on how your leading edge conversations are going with the rating agencies? Is it reasonable to assume that you can be in line for an upgrade to IG status in the next year or so?

Sure. Thank you for the question. So first of all, it remains one of our primary objectives to continue our deleveraging, as we have stated in previous calls. We were successful in reducing our net debt by $400 million from $1.6 billion to $1.2 billion in the quarter. We have continued to realize our Technip Energies shares, and we have started our debt reduction process with a tender offer this quarter, which netted about $164 million in debt reduction. In terms of looking ahead at the rating agency question that you just raised, it's a little more complicated to give you a straight answer on how fast we can move on that. We are first and foremost really dedicated to our debt production, and we're going to let that play out. As these leverage metrics improve, we clearly expect to get into a range where it's possible to get back to investment grade. Now, the exact timing of that, I'm not going to go and say that I have an exact timing, but it's not going to happen, at least in the short term, in the near term. So it will be something that is more on an intermediate term basis.

Great. And then just my follow up. Doug, what type of visibility are you seeing in Subsea orders into 2023, just given the improvement in the outlook for commodity prices? And then just maybe on the Analyst Day, it sounds like we're going to get to see a lot of relatively media updates. Can you maybe highlight on the financial side anything we can look forward to in terms of longer-term outlook comments for you guys next month?

Sure. Good morning, Arun. Let's start with the Analyst Day question first. Indeed, you're going to see some longer-term projections that I think will be quite inspiring for many people. So we'll leave it at that. We'll have more to say here in just a few weeks at Analyst Day. But yes, you should expect some additional longer-term outlook as we really begin to see the full leverage and potential of this pure-play company. Let me pivot to your first question, which was around the outlook for inbound orders for Subsea. That's a bit further than we've provided any sort of guidance or commentary on. But in fairness, we are getting close to 2022. So let me give you kind of my best outlook as we see things stacking up. First and foremost, our frontend engineering activity continues to ramp up. We have exceeded the level that we anticipated for this year. And what's really interesting about what's going on is all of those proprietary projects that we're working on. Again, we had another solid quarter inbound in Q3, certainly when you compare it to the rest of the market. And the question is how can we do that? And again, it comes back to the direct awards that we receive by being the only company that has a fully integrated offering, as well as the strength of our alliance partners. So just to give you an example of that, in those frontend engineering studies that we're currently performing, approximately two-thirds of those are integrated projects, of which 75% will be direct awarded to our company. They'll never go out into the competitive marketplace. So it gives you an idea of kind of the pipeline that we're building up. If I try to translate that into some numbers that you might anticipate, looking to the fourth quarter as we indicated, we expect to be in line with consensus. We commented on that last quarter. We don't change our view in any way on that. And that would deliver solid double-digit growth for 2021 versus 2020, again, a fairly substantial feat coming out of 2020. If you look a bit further beyond that, it gets a little more opaque, as you can expect at this time. But things are stacking up relatively nicely. We do have that proprietary pipeline that's unique to our company. So if you'll allow me to look at it from a five-quarter perspective, meaning give me Q4 plus 2022, because some of the orders in Q4 may slide into 2022 or some orders that we anticipate currently early in the first quarter may be pulled into the fourth quarter. That just comes down to our clients' budgetary considerations at the end of the year. So if I look at those five quarters, Arun, we could very well see our Subsea inbound orders approaching $7 billion.

Great color. Thanks a lot.

Your next question comes from the line of Waqar Syed with ATB Capital Markets.

Thank you for taking my question. Could you maybe talk about some supply chain disruptions if they had any impact on the quarter or in the coming quarters, both on the Surface side and Subsea side? And then, Doug, you talked about some of the competitive landscape and how you're positioned on the Subsea side. But could you talk about on the Surface side what the competitive landscape is, and what the pricing dynamics may be in that segment of the market?

Sure. Thank you, Waqar. Again, I'll start with the second one first. So our surface business is very different, as we have pointed out many times between Surface International and Surface Americas. Surface International is a much larger business for us than Surface Americas. And it's a market in which we are the industry leader. It's driven by technology and projects. We have a very unique vertically integrated supply chain, and we're going to talk more about that at Analyst Day. As a matter of fact, we're going to show you a demonstration between a Surface International tree system versus a Surface Americas tree system. I think it will help everybody understand what we've been talking about and how different they are. I've often said it's about a 10x difference. So that's our SI business, Surface International business. We have really strong positions, particularly in the Middle East as well as North Africa. I mentioned in my prepared remarks, we're anticipating a really strong fourth quarter in inbound orders for Surface International, mainly driven by the Middle East, two or three countries in the Middle East, and we couldn't be more excited about that. Surface Americas is very different. Surface Americas, there's lots and lots of competition, and we're not the market leader. We have a strong team and a strong reputation. We have some very important clients, typically the larger clients that we work for. And we're really proud of the work that we perform. But it is more of a commoditized product market, which is not necessarily where we differentiate as a technology company. In terms of pricing, in both markets, we continue to see additional volumes coming through. When additional volumes come through, that tends to translate into pricing. But let me transition from the pricing question into the supply chain question. When you look at our business, we're mainly a mid-cycle to long-cycle type business. It's why we have such a substantial backlog, which is very favorable, particularly having gone through what the industry and our company went through in 2020. We benefited by the strength of that backlog and have now come out even stronger, and just got done talking about the potential inbound opportunities, which I think are quite eye-opening hopefully for everybody on the call for our Subsea business. So when we think about the pricing and Surface in particular, or in terms of the cycle of the business, when you have a short-cycle business and there are inflationary pressures, and look, we're all experiencing inflationary pressures. We're experiencing it in our personal lives as well as our professional lives. It's very real. Now, I'm very proud of the work that our supply chain team has done. We've done really unique things to be able to offset a significant amount of the impact from the inflation. It's why we don't call it out. We manage around it, if you will, but it's there. It's absolutely there, Waqar. So when you're in a short-cycle business where you don't have the ability to really lock-in predetermined amounts of materials, et cetera, and you're responding to the market, there is greater inflation. So there we would expect and we manage the business so that our pricing offsets that inflationary pressure. So in Surface Americas, pricing is certainly a major discussion with our clients and something that we will continue to do to offset the inflationary pressure in that short-cycle business. In the longer cycle businesses, we have much better control over inflation because of the uniqueness of our supply chain, the intimate partnerships that we not only have with our clients but also with our suppliers. We've helped many of them go through the 2020 period. We’ve become stronger as a result of that in terms of the relationship between our companies, and they’re giving us the benefit of that as we move into an inflationary environment. So there's many different aspects involved that we have a much better chance and opportunity to manage that inflation in the longer cycle businesses than in the shorter cycle businesses where yes, you have to rely on pricing.

Thank you very much.

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

Hi. Good morning, guys. That $7 billion number on orders that you just put out there, was that a Subsea number or was that a total order number?

Subsea.

Wow. And then on that Subsea side, can you just talk a little bit about how much of that you think is Brazil as kind of the one area we're starting to see a lot out of you? You noted a couple of awards recently. Can you maybe just talk about that market and kind of how you see Petrobras getting back to kind of maybe where they were before? Obviously, there were a big chunk of offshore rigs at one time and how they're coming back. Can you just kind of talk a little bit about some of the dynamics that are going on there and how you see the order book there? I'm just kind of curious how much of that $7 billion could be a Brazilian number.

Sure. Let me expand it just slightly, David, and say South America, right. So South America is by far the most important market for our Subsea business this decade. But it's not just Brazil. Don't forget Guyana. Guyana is hugely important to us. We are deeply grateful for the relationship that we have with ExxonMobil and Hess in the country and the ability that we've been able to supply all of the subsea equipment in Brazil to date and continue to drive project performance and hopefully future awards in Guyana. So Guyana is very important. We know that Suriname and other areas are beginning to develop later in the decade. I would say towards the end of the decade, we would anticipate Mexico as well as being potentially a very important country in South America in terms of Subsea business. Now turning to Brazil, clearly the largest. As I’ve pointed out in my prepared remarks, we've been there for five decades. We have 98% local content. We have more capabilities in Brazil than we have in any other country in terms of manufacturing, the fleet, R&D, the people, so forth and so on, and just a long, rich history. We reached the manufacturing of our 700th tree in Brazil. I believe that's more or less than more of all the rest combined. So it's a very, very significant market for us. We're very, very proud. We feel very privileged. We have a great relationship and a very long relationship with Petrobras. We've done a lot of new technology development with Petrobras. We talked about a Robot Valve Controlled manifold. This is amazing technology. We're already on our second generation of this technology in Brazil, and it really feeds our all-electric ambitions around the world. So a very important partnership and well-established partnership. And yes, Brazil will play a major role both in the 2022 inbound, but I would expect it to play a major role beyond that as well.

Doug, in your prepared remarks, you mentioned the increase in Surface orders. You indicated that there are a couple of significant tenders or contracts on the horizon. Could you provide more details about that? I believe you were referring to the Surface opportunities in the Middle East. Any additional information would be greatly appreciated. Thank you.

Sure, David. And yes, thanks for clarifying. I want to be clear; we were talking about the significant increase in Q4 orders was in reference to Surface Technologies, specifically in the Middle East and more specifically in Abu Dhabi from ADNOC and in Saudi Arabia from Saudi Aramco.

Your next question comes from the line of Ian Macpherson with Piper Sandler.

Thanks. Good morning, Doug.

Good morning.

Hi. I was curious if we've noticed that your pipeline has expanded over the past couple of quarters with a few major projects added, including two very large ones and several medium-sized projects. Would it be reasonable to assume a trend from this and expect more growth and opportunities to emerge as you update your pipeline in the next few quarters? Is this what you anticipate, or do you think we might just be seeing some previously stalled projects coming back into play, making this more of a temporary situation?

Thank you for the question. First, I want to acknowledge that four quarters can indicate a trend, but I advise caution in making projections based solely on that. In reference to the Opportunity List, there are a few projects that have been there for a while without moving to project FID. However, most of the projects on the list have emerged recently in the last quarter. I wouldn't describe them as stalled projects waiting to come through. Reflecting on my earlier comments regarding our frontend activity, this is indicative of the pre-opportunity stage that may not yet be included in the Subsea Opportunity List. It’s also essential to note that all integrated direct awards are not included on that list, as sharing this information would put us at a competitive disadvantage. For instance, this quarter we recorded $1.1 billion in incoming opportunities, but without specific project announcements, other than vessel charters. This establishes a robust foundation, driven by a proprietary set of opportunities that aren't reflected on the Subsea Opportunity List. Returning to your initial question, I want to exercise caution. There have been discussions and market intelligence about certain Búzios projects likely reaching FID in the near future, as well as other projects you might have seen in the North Sea. Once these are awarded, they will be removed from the Subsea Opportunity List. While there are definitely projects available to fill the gaps, I want to avoid the impression that we can simply project consistent growth quarter after quarter, even though we've seen that trend over the last four quarters. I want to be conservative in saying that if two, three, or four projects are awarded in one quarter, that could remove several billion from the list, possibly replaced by even more, but not necessarily within the same timeframe.

Thank you for the clarity. For a follow-up, I don't want to completely overshadow your content for next month, but I know you'll discuss positioning for new energy projects, Deep Purple, and others. I'm curious about the timeframe for when that type of work might significantly impact your Subsea backlog. Are we likely to see the initial signs of that in your orders for 2022, or might the revival of conventional Subsea oil projects come at the cost or delay of accelerating energy transition projects?

Thank you, Ian. You will hear more about this in a few weeks. Since you asked, I'll offer some thoughts in anticipation of the Analyst Day. We are focused on wind, wave, hydrogen, and carbon transportation and storage, along with other potential offshore energy sources. Our role is to be the enabler, advancing and accelerating the energy transition. As a system integrator, we combine different technologies to create unique systems, remaining agnostic to which energy source generates revenue quickest or the most for us. Our aim is to assist the world and the industry in driving the energy transition by utilizing 70% of the globe's surface area offshore, which is our expertise. This knowledge is attracting more companies, and we frequently announce new investments and partnerships in this field. One notable example is our recent alliance with Talos Energy for carbon capture and storage in the Gulf of Mexico. There is considerable activity in the Gulf Coast region that could benefit from carbon capture and storage, helping to reduce greenhouse gas emissions. With this alliance, we anticipate starting to see potential project awards in carbon capture and storage as soon as 2022.

That's great. Thanks. I look forward to hearing more in a few weeks. Thanks for the perspectives this morning.

Your next question comes from Vaibhav Vaishnav with Coker Palmer.

Hi. Good morning, and thank you for taking my question. Doug, just to try to put in context of that $7 billion potential awards over the next 12 months, is that fair to think that could be around 1x book to bill, or am I at least in the ballpark when I say that?

Let me clarify just one thing. It was over the next five quarters, so that would be over the next 15 months, right? What I was saying was it's hard to pinpoint exactly Q4 versus Q1 because some things will move back and forth. So I said based on five quarters or 15 months, we see a lot at this time. Look, it will change, and we'll provide an update as we have more visibility. But we have a line of sight right now up to $7 billion of orders in the next five quarters or the next 15 months. Certainly, if you do the math behind that and make an assumption for Q4, you're looking at a book to bill above 1.0 for sure for 2022, which is exciting and certainly speaks volumes for where we are as a company and our position in this industry.

Got it. And as we think about improving revenues next year and over the next few years, how should we think about CapEx? Is like this $250 million CapEx good enough like a starting point, or do we need to think about if the revenues increase, does our CapEx also need to increase?

Yes, let me just start by reiterating our philosophy, right. Our philosophy is to focus on through-cycle returns. We've done some very unique things. I believe you've seen us really, let's say, do things differently from the past in terms of how we manage and operate the assets of our company. We have actually reduced the size of our fleet while growing the company. We do that through forming very important relationships and being a company that works well with others. We can do that through alliances, for example, like we have an alliance with Allseas, and we now work with them and look for opportunities together with them, benefiting both companies but also benefiting the broader industry. So a real discipline, if you will. I'm going to turn it over to Alf to give a bit more insight into kind of what you should be thinking about in terms of the actual CapEx numbers.

Yes, thank you, Doug. With the background of what Doug said, clearly this number is not expected to grow relative to revenue. So if you look at the ratio that we're at right now, it will certainly not be expected to grow over that ratio for any extended periods of time. If you also further look at our business and what Doug was saying, more as we grow further in revenue and with the support of third-party alliances, we believe that the incremental CapEx can actually be at a lower level for some of our core business. You also look at some of the other things we're doing in our business; we are investing in our Subsea 2.0 product technology, driving more standardization, and also allows us for actually investing in less incremental CapEx per manufacturing unit, if you will. So there are a couple of drivers that can be helpful for the long term. But right now, if you want to stay at a relative ratio, I think you should be fairly safe instead of staying at that relative ratio between revenue and CapEx as it is stated today.

That's very helpful. Thank you for taking my questions.

At this time, there are no further questions. I would like to turn the call over to Matt Seinsheimer for closing remarks.

This concludes our third quarter conference call. A replay of the call will be available on our website beginning at approximately 8 PM British summer time today. If you have any further questions, please feel free to contact the Investor Relations team. Thank you very much for joining us. Operator, you may now end the call.

This concludes today's conference. You may now disconnect.