Good morning and welcome everyone to the TechnipFMC First Quarter 2022 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. There will be a question-and-answer session. Now I would like to turn the call over to our first presenter for today, Mr. Matt Seinsheimer, you may begin the conference.

Good morning and good afternoon and welcome to TechnipFMC's first quarter 2022 earnings conference call. Our news release and financial statements issued yesterday can be found on our website. I would 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. We wish to caution you not to place undue reliance on any forward-looking statements, which speak only as of the date hereof. We undertake no obligation to publicly update or revise any of our forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise. I will now turn the call over to Doug Pferdehirt, TechnipFMC's Chair and Chief Executive Officer.

Thank you, Matt. Good afternoon. Thank you for participating in our first quarter earnings call. I would like to start off by addressing the war in Ukraine. What the world has witnessed has been truly heartbreaking. I am extremely proud of the compassion our teams worldwide are showing through their support for refugees. I want to personally recognize our employees in Poland, many of whom have been giving direct support to Ukrainian families by opening up their hearts and homes and providing much-needed shelter and care. As a company, we continue to support their efforts through our global humanitarian fund, providing practical and financial help where it is needed most. The invasion has prompted energy security to become a global priority. We remain committed to helping our clients address the essential needs for hydrocarbons today to ensure the continuity of affordable energy prices, while also playing an essential role in the longer-term energy transition. Now turning to the quarterly results. Total company revenue in the period was $1.6 billion, total company adjusted EBITDA for the quarter was $154 million, with an adjusted EBITDA margin of 9.9%. Total company inbound orders in the quarter were $2.2 billion, driving sequential growth in backlog to $8.9 billion. Surface Technologies inbound orders were $291 million, with a book-to-bill above one, driven by strength in the U.S. market. North America sales and profitability grew sequentially, driven by increased drilling and completion activity and an improved pricing environment. Outside of North America, we are investing in new manufacturing capacity to support the strong Middle East outlook. As previously highlighted, we are transitioning to a new facility in Saudi Arabia, which was expected to be a headwind to our financial results in the period. The qualification of the facility is extensive and the process has taken us more time than previously anticipated. We are now undergoing final production testing and expect final certification of the facility by the end of the second quarter, at which time we anticipate an acceleration of orders in country. We remain confident in meeting our full-year expectations as we have secured plans to accelerate recognition of these orders. Matt will cover the near-term financial impacts during his prepared remarks. Our results in the period also reflected our ability to effectively navigate the ongoing challenges facing the global supply chain. Inflationary pricing and logistical bottlenecks have resulted from a number of factors. The energy transition, the global pandemic and the Russian invasion of Ukraine have all played a role, disrupting access to key commodities and supply routes at a time when the global economy is quickly transitioning from a period of contraction to one of accelerating growth. But we are not immune to all of the market dislocations, we have taken many strategic actions over the last several years that have mitigated the near-term effects. We are utilizing the lessons learned from previous growth cycles to drive simplification, standardization and industrialization throughout the organization. We have increased supplier diversification to reduce dependencies on sole source supply or adding supply chain capacity to ensure proper balance with internal manufacturing capacity. And we are developing stronger relationships with our supply chain, much like the alliance partnerships and frame agreements we have developed over the years with our customers. We are working more closely with our supply chain partners to better integrate them into our planning processes. Strengthening these longstanding relationships will keep us well positioned in times of market volatility. Our Subsea 2.0 product platform is our most prominent example of industrialization, allowing for the successful implementation of a configure to order or CTO model. CTO has enabled us to create a value stream that delivers a more competitive offering to the market when compared to an equivalent engineered to order product, resulting in a 25% reduction in cost and a 50% reduction in product delivery time. Savings that are both real and sustainable. And we have paved the way for other products to adopt a similar operating model, enabling an enterprise-wide approach. This resulted in three CTO principles that serve as the fundamental basis of how we operate in this environment. First, we are eliminating design engineering, second, we have redefined our sourcing strategy by utilizing pre-approved suppliers and standard configurations. And third, we are transforming the manufacturing flow by leveraging configurable assemblies. With CTO, the greater predictability of product manufacturing and high volumes of pre-engineered components has allowed us to completely redefine the supply chain. Removing significant inventory from our balance sheet and cutting up to eight months of lead time. Ultimately, our success is determined by our execution, our client relationships and our contractual arrangements. Project execution remains a core competency and oftentimes a point of competitive differentiation. But it is also dependent upon the partnerships we established with both our customers and our suppliers. We are seeing strong support from our customers to ensure we can address their needs both today and throughout this evolving period of increased activity. An example of which is a new framework agreement with Total Energies, where we utilize Subsea 2.0 to address their future technology needs. We are seeing improvements in contractual arrangements that more appropriately balance the terms and conditions needed to support this growth, be it through more favorable payment terms or supplier investment and risk-sharing. In Subsea, we had a very strong start to the year with inbound orders of $1.9 billion and a book-to-bill of $1.5 billion. This included two announced awards in the period: Petrobras' Buzios 6 greenfield development and Wintershall's Maria revitalization iEPCI project. This is our first iEPCI with Wintershall DEA, an award built on our ability to leverage our iFEED model. Through early engagement we optimize the field layout to maximize the benefits of integrated project execution. Our involvement helps reduce the project's carbon footprint by modifying existing infrastructure, eliminating the need for an additional 4,000 meters of pipe. What stands out most in the quarter is the breadth of the inbound, nearly 40% of which came from smaller unannounced project awards, much of which was directly awarded to our company. This is a very diverse source of inbound. These smaller awards in the quarter included projects for more than 30 operators, sourced from all major basins across the globe. Beyond project activity, subsea services remained resilient in the quarter despite the impact of weather-related seasonality. Activity trends remain favorable and consistent with our view that Subsea services revenue will grow to approximately $1.2 billion this year. With energy security now a clear global priority, both operators and suppliers are working more collaboratively in the current environment. Our conversations with clients today are focused on balancing the need for new and different sources of supply with the challenges of more scarce resources, be it commodity inputs, skilled labor, supply chain logistics or physical capacity requirements. This increase in constructive dialog supports our view that we are in the midst of a multi-year upcycle for oil and gas. Our Subsea opportunity list continues to highlight a very robust market outlook, representing an opportunity set of larger projects that totals more than $20 billion for the industry, led by Brazil, Guyana and West Africa. Looking ahead, we expect increased activity in other regions of the world to meet the growing global demand for feed gas used in LNG facilities, the majority of which is supplied by Subsea wells. We expect these volumes to be supplied by increased activity in major basins from Africa to Asia-Pacific. We have a strong track record with large gas developments and are well-positioned as an agnostic provider of integrated Subsea projects. The expanding LNG market gives us an even greater confidence in the intermediate-term outlook. We continue to anticipate Subsea inbound order growth of up to 30% in 2022, with iEPCI direct awards in Subsea services together approaching 75% of our inbound orders. I will now turn the call over to Alf to discuss our financial results.

Thank you Doug. Total company inbound orders were $2.2 billion in the quarter driven by strong Subsea inbound of $1.9 billion. Total company backlog grew sequentially to $8.9 billion at the end of the period. Revenue in the quarter was $1.6 billion. Adjusted EBITDA was $154 million, which included a foreign exchange gain of $28 million. First quarter reported loss from continuing operations was $0.09 per diluted share, which included after-tax charges and credits that netted to an expense of $29 million or $0.06 per share. These charges included the following: expenses totaling $1 million related to impairment restructuring and other charges and a loss of $29 million on our equity ownership in TechnipEnergies. When excluding the impact of charges and credits, our adjusted loss from continuing operations was $0.03 per share. The adjusted loss also included the foreign exchange gain. Turning to segment results. In Subsea, revenue was $1.3 billion, up 4% from the fourth quarter. Adjusted EBITDA was $129 million, with an adjusted EBITDA margin of 10%, in line with the fourth quarter. Revenue increased sequentially, primarily due to higher project activity in Australia, North America, and Asia, partially offset by reduced activity in Africa. Subsea services revenue was largely unchanged from the fourth quarter due to a seasonal impact of weather in both periods. The increase in adjusted EBITDA was broadly in line with the sequential increase in revenue. In Surface Technologies, revenue was $267 million, down 7% from the fourth quarter. Revenue decreased sequentially, primarily due to lower international activity resulting from our transition to the new manufacturing facility in Saudi Arabia. The decline in segment revenue was partially offset by growth in North America, which benefited from the continued increase in drilling and completion activity. Adjusted EBITDA was $22 million, a 24% decrease sequentially. Results were negatively impacted by lower international revenue and the impacts of the manufacturing transition, partially offset by higher activity and an improving pricing environment in North America. Adjusted EBITDA margin was 8.2%. Turning to corporate and other items in the period. Corporate expense was $30 million, which included $3 million of restructuring and other charges. Net interest expense was $34 million and is expected to decline during the year as we achieve our stated objective to reduce gross debt. Tax expense was $26 million. Cash required by activities from continuing operations was $329 million. Capital expenditures were $27 million. This resulted in free cash flow consumption of $357 million in the first quarter. The outflow, which we expected and highlighted in February, was largely due to a working capital consumption related to the timing of project milestones and the payment of annual incentives. As discussed when we provided full year guidance, we expect free cash flow to be weighted to the second half of the year with major milestone collections throughout the second generation. We ended the quarter with cash and cash equivalents of $1.2 billion and net debt of $802 million. During the first quarter, we sold $17.8 million of TechnipEnergies shares for total proceeds of $239 million. In April, we sold our remaining 4 million shares. Following the partial spin-off in February of last year, we retained ownership of 49.9% of TechnipEnergies' outstanding shares. We have now fully exited our position for total proceeds of $1.2 billion. Continuing with our focus on debt reduction, last week, we commenced a tender offer for $320 million of our outstanding 6.5% senior notes due in February 2026. When combined with the retirement of additional debt maturing in June, we expect to reduce gross debt by up to $400 million in the second quarter. This would imply gross debt of approximately $1.6 billion at the end of the second quarter and would represent nearly a $1 billion reduction in gross debt since the spin-off in the first quarter of 2021. Lastly, let me provide some thoughts on the second quarter. For Subsea, we expect the second quarter to benefit from the typical seasonal uplift with sequential revenue growth of approximately 10%, driving margin expansion of up to 200 basis points. For Surface Technologies, we expect revenue growth in the high single digits with incremental EBITDA margins of up to 30%. I would also note that our second quarter results continue to be negatively impacted by the transition to our new Saudi facility. I will now turn the call back over to Doug for his closing remarks.

Thank you, Alf. Before moving to Q&A, I would like to reiterate a few key points. First, we are in the midst of a multi-year upcycle for oil and gas investment. In Subsea, we are experiencing improvements in pricing and contractual arrangements that more appropriately balance the terms and conditions needed to support this growth. In Surface Technologies, we will continue to prioritize technology, integration, and cash generation over growth due to the structural changes in this evolving market. And we are confident in a recovery in Surface international orders in the back half of the year. Second, the separation of TechnipEnergies is now fully complete. With the final sale of our remaining ownership stake, just 14 months from the date of the partial spin. Lastly, our $1.2 billion cash position and our confidence in generating strong free cash flow in the second half of the year are allowing us to take aggressive steps to further reduce our gross debt, another important milestone on our path for significant shareholder distributions. Operator, you may now open the line for questions.

Thank you. Your first question comes from Ian MacPherson of Piper Sandler. Your line is now open.

Thank you very much. Good morning.

Good morning, Ian.

Doug, you mentioned 40% or so of your $1.9 billion Subsea inbound coming from your smaller direct awards from 30 or so operators. That just seems certainly unprecedented in recent memory. Is that bucket of orders more reflective of the recent improvement in pricing that you're describing than say the larger orders are, or is your language around price improvement more representative of the entire pipeline of new orders?

Thanks, Ian, that's an interesting question. I agree that the diverse range of clients, both geographically and in terms of numbers, strongly indicates a positive offshore outlook moving forward. We continue to receive contributions from major international oil companies and national oil companies. However, we've noticed a growing number of smaller independent operators who are drawn to the iEPCI model. This model allows them to advance projects quickly, significantly enhancing the overall project economics with a company that has a proven history of delivering these iEPCI projects, which we pioneered in 2017. This indicates a genuine recognition of value from those clients regarding our unique offering in the marketplace. However, pricing is not dependent on just one group; it's more generalized across the board. We're truly excited about this expanding client base offshore, and our ability to capture that opportunity is quite remarkable.

Yeah, indeed. And so, with the improved conditions with pricing in your Subsea business, does that impact your view on the 15% Subsea margins, mid-cycle margins that you described at the Capital Markets Day in November? Does that look like it could materialize sooner than you thought four or five months ago because of the increased volume coming into the market now?

Yes.

Okay. All right. Good. If I can ask one more, Alf, you mentioned that with Surface 30% incremental margins in Q2, but still with some headwinds from the new facility ramp, would you care to quantify what that impact is so we can roll forward our thoughts on the second half surface margins?

Sure, I'll give you some color to that. So, we clearly signaled in the fourth quarter call that we expected an impact from this facility transition. I would say that we signaled at the time that it would be up 200 basis points, I believe it's in that range. The impact that we're seeing in the quarter. And if you are kind of dialing ahead, you think about Q2 performance. I think you need to look at it. I think Surface segment as a function of North American progress where we are seeing the activity continuing to ramp up and continuing to be favorable as well as we mentioned also that we do see pricing and pricing is a focus definite focus for us in the North American market as well. But admittedly, the Q2 will continue to be soft on the international side and the Saudi facility will still impact the second quarter. So really, you will not see the major margin ramp up in Surface until the second half of 2022 and again based on those dynamics of North America, market continuing to do well and we expect to fully, we are taking actions today to be ready to handle all the Middle East orders that we are expecting to come our way here towards during the second quarter and onwards. And we are ready for that and we're going to be seeing significantly improving revenue and EBITDA performance in the second half of 2022.

That's perfect. Thanks very much.

Your next question comes from Arun Jayaram of JPMorgan Chase. Your line is now open.

Good morning, good afternoon team. Doug, I wanted to focus on your comments about pricing improvement and enhancing terms and contracts. You reported $1.9 billion in inbound awards in Subsea. Is this figure indicative of your first-quarter order book, or should we view it as prospective? Additionally, could you share your thoughts on the margin profile in relation to the 11% to 12% guidance for this year? Do you anticipate that the new orders will positively influence that outlook as you aim for 15% margins, as Ian mentioned in the 2025 timeframe?

Okay. Thank you, Arun. Let me take this opportunity to kind of break down the pricing environment for us between our businesses and globally if you don't mind, in doing so, I'll be able to answer your question. So let's start, two businesses Surface and Subsea. So, let's start with Surface. Two very different markets that we serve in the North American market, the international market. In the North American market, it's almost like a tennis match at this point. It's a constant balancing, our pricing goes up, inflation goes up, pricing must go up again to maintain that pricing, it's that active. When you go into the international market, there tend to be longer-term contracts, frame agreements. And in this scenario, we are actively looking at those contracts have pricing mechanisms in them, but we are also looking to supplement that with incremental pricing given the current market conditions. Those are ongoing and we would expect to see the impact of those more in the second half of the year. Moving to Subsea, there's really two different approaches that are unique to our company. And let me explain those: is the 75% in the 25%. So, the 75% is the percentage of our market that is direct awarded. This is through our unique iEPCI offering, our alliance partners and our services. Here, our clients are truly looking for value creation and are very comfortable and acknowledge the value that we contribute and they want to make sure that we are economically rewarded. So, it is an ongoing discussion in a very comfortable and collaborative environment in which for us to continue to ensure that we are capturing economic value that is appropriate in what we create, as well as in the environment in which we exist. The 25% is the open competitive market three bids in a buy, if you will. I hear the returns are improving, but still not adequate. We are addressing this with an aggressive pricing position, as well as the terms and conditions that I've alluded to throughout my prepared remarks. So when we think about how, what does that mean for us knowing that we have the 75% allows us to be very selective in the 25% and allows us to help the industry in general, but certainly ourselves by driving the appropriate terms and conditions given the current market environment. And that can be an enhancement of the traditional indexes that exist in new contracts today. But it also has to now be able to address supply scarcity. In some cases, there's supply rationing going on. We need to make sure that we're protected by that in our contracts or what I would call extraordinary inflation, when you have disruptions of the supply chain like for instance, what happened to nickel in this last quarter. So, we're enhancing those features within the terms and conditions of our contracts, but it also allows us to simply no-bid contracts. So we have been no bidding billions of dollars of contracts and still recording a $1.9 billion inbound of high-quality inbound. And just one last comment on the $1.9 billion of high-quality inbound. That is absolutely accretive to the margins in backlog, but it is just the beginning, we started and the inflection actually occurred four quarters ago, and I called at the time that our margin and backlogs have inflected and they did inflect over the past year. What we saw this quarter was a greater amplitude of that inflection in a positive direction.

Great, thank you for that answer. My follow-up is, I wanted to explore a bit more in detail this path to shareholder distributions, your net debt is at just over $800 million, you plan to pay down about $400 million of gross debt in 2Q. But I was wondering if you could frame how long the path would get, maybe could you give us some sense of minimum cash requirements to run the business and perhaps the timing and how you think about just in the excess free cash flow to shareholders.

Absolutely. First, let me reiterate what we discussed at our Analyst Day. We are committed to distributing returns to shareholders. At that time, we indicated that the timing for this would depend on achieving a specific target capital structure. This structure includes gross debt of $1.3 billion and cash of $800 million. Currently, we estimate that we need approximately $800 million to operate the business. In the long term, we can consider whether we can further optimize that figure, but as it stands, that is our target capital structure, which represents $0.5 billion of net debt. Looking further into this year, we did experience a weak free cash flow this quarter, but we are confident in our full-year guidance, suggesting we will generate over $500 million in free cash flow for the rest of the year. When factoring in debt reduction, we will be close to reaching that target capital structure by year-end. However, I won’t comment on the specific timing for any shareholder distributions at this point. We are pleased with the progress made in debt reduction necessary for this, and we recently initiated plans for a $400 million reduction for this quarter. Our goal is to reach the target capital structure by the end of the year.

Great. Thanks a lot.

Thank you. Your next question comes from Guillaume Delaby of Societe Generale. Your line is now open.

Yes, good afternoon. I have two questions. First, Doug, could you provide some insights on the behavior of international oil companies over the past few weeks or months? Have you noticed any changes? And after that, I have another question for Alf.

Sure, it's a beautiful afternoon here in Newcastle at our manufacturing facility where we produce umbilicals. Regarding the behavior of the IOCs, I prefer not to comment directly on it. However, I can say that we have maintained activity in front-end studies, ongoing projects, and are exploring both greenfield opportunities and brownfield tiebacks to their existing infrastructure. Most of their operations are running below capacity, making the economics for tie-ins and tie-backs very appealing. They are enthusiastic about our all-electric offering and the benefits it provides, along with our iEPCI offering, which can deliver results nine to 12 months earlier compared to a more traditional approach. This isn’t a recent development; we have a continuous, positive dialogue with our IOC clients, and we value these relationships greatly.

Thank you very much, Doug. So my second question is for Alf. I would like to try to reconcile and sorry about that. So, the timing in terms of cash flow between Q2, where you want to reduce gross debt by $400 million and H2, where do you expect strong positive free cash flow, given your comments regarding Subsea and to a lesser extent Surface technologies in Q2. Should we assume that in Q2 you might already generate some net free cash flow?

So thank you very much for the question. So maybe first to start off with, we are sitting at this point in time with about $1.2 billion of cash flow. So clearly, some of the existing available cash will be the primary source for the debt reduction for the second quarter. In terms of free cash flow generation for this upcoming quarter versus the rest of the year, it's always, even sitting today, it's always a little bit unpredictable to say exactly how much we will get in the second quarter versus the rest of the year, but I would say that we are at least going to be neutral or trending towards neutral in the second quarter, but it remains as I said in the prepared remarks that the majority of free cash flow generation is going to come in the second half of the year and to be frank, mostly also in the fourth quarter. So overall, I mean, the main source is going to be our existing cash in terms of the debt reduction that we're doing.

Thank you very much. So Q2 is an inflection point.

Thank you. Your next question comes from Chase Mulvehill. Your line is now open.

Hey. Good afternoon, everyone over there. How is everyone doing? I guess, first question, Doug is when we think about inflation, we get a lot of questions from investors around your ability to kind of preserve margin in your current backlog just given raw material inflation. I mean it sounds like that you're trying to step up the terms of conditions on the projects that you're booking today, but maybe could you talk to your backlog, what kind of terms and conditions you have to be able to preserve margin because obviously inflation on the raw materials is increasing quite a bit.

Good morning, Chase, and welcome to the call. We're thrilled to have you with us, and I appreciate your interest in joining. Regarding the existing contracts, I want to emphasize that we have maintained a disciplined approach in our contractual agreements. When we receive an order, we typically have 80% to 90% of the costs committed, allowing us to lock in those costs with our suppliers. Additionally, we have escalation clauses with our clients that are usually tied to indices to protect us in an inflationary environment. Over the past two and a half years, we've demonstrated resilience in managing the inflationary challenges, which is largely due to our product platform development, particularly with Subsea 2.0. This shift has enabled us to standardize our operations and reduce the strain on our supply chain. With the new Subsea 2.0 platform and our configure-to-order model, we can utilize standard configurable designs. Our supply chain partners have volume assurance, enabling them to plan effectively while ensuring a consistent supply. As a result, they stock the necessary raw materials and configurable components for us, which we draw from when we secure our awards. This model is unique to our company, and it requires significant market position, which we've achieved through our iEPCI alliances. This quarter, we booked $1.9 billion in new orders with only two announced awards. I also want to clarify that the Yellowtail project in Guyana with ExxonMobil, which we are excited about, has not yet been included in Q1 but will be incoming imminently, likely in Q2. This coordinated approach is crucial, and it would be very challenging for companies that haven't undergone a similar transformation to achieve the same level of success.

Thank you for the information. I have a quick follow-up, possibly for Alf. We saw a significant cash burn in the first quarter, mainly due to an increase in working capital. It's been a while since I've followed the stock, but historically, large orders led to substantial prepayments. It seems like the recent orders were smaller compared to the larger ones seen in the past. When you mentioned changes in terms and conditions, does this refer to improving prepayments for smaller orders, or is there any other change regarding prepayments as we move forward?

Yes, Mulvehill. Thanks for the question. So, maybe first just clarify to be really sure when we go backwards in time that obviously there is a big difference between when we had the TechnipEnergies as part of our business versus now, to the size of these advances and prepayments on an individual order basis is going to be smaller in general, but they are still a significant part of what we do and it's correct that when we target new awards, we are always targeting to have what we call a working capital neutral or better position throughout the life of the project. Now, as you said, this is an area where it has been maybe going in the wrong direction for us during these tougher times and certainly part of what Doug described as tightening up the commercial terms and conditions. Looking at the payment structure of our contracts is certainly part of that. When you just then look at the advance payments or prepayments as is common themselves. I would kind of say, they are not necessarily always awarded to coincide with the signing of the contract. So, for some of them that could be dependent on an early activity, some sort of early mobilization, early engineering, early procurement, so you may sometimes see a lag between when the awards are coming and when you actually see some of the impact due to the working capital into the advances. Hopefully, that helps you a little bit, but it's true that this is a focus for us, we look for prepayments and we look for them to be early in the contract, but again dependent on some milestones.

Okay. All right, makes sense. I'll turn it back over. Thanks everybody.

Thank you. Your next question comes from Bertrand Hodee of Kepler Cheuvreux. Your line is now open.

Yes. Hello, and thank you for taking my question. A question on the CTO model you rightly explained at the Capital Market Day last year that volumes is critical to deliver a full benefit of the CTO model. Given your outlook for Subsea order intake, when do you think you would be in a position to deliver the full benefits from the CTO model in the coming quarters or when do you think you will be able to really fully deliver the benefits?

Thank you for the intriguing question. To begin, it's essential to undergo the training and develop the technology for transformation to truly realize the benefits. This hinges on two key factors: gross volume and net volume, which pertains to our most leveraged industrialized product platform, Subsea 2.0. We started with trees, moved to controls, and are now advancing to umbilicals, with plans for growth across the entire platform. This presents an evolving set of opportunities, and we expect Subsea 2.0 to account for 50% of our inbound over the next couple of years. So, let's discuss gross inbound. We've witnessed significant growth in gross inbound since 2019, delivering a strong inbound last year of $5 billion and projecting $6.5 billion this year, with $1.9 billion booked in the first quarter. We achieved a book to bill of $1.5 billion, a level we haven't seen since the first and second quarters of 2019. The growth is building nicely. Additionally, there's the net portion that primarily benefits from the CTO model, so we're anticipating that 50% of Subsea 2.0 over the next two years. Furthermore, we will keep expanding the Subsea 2.0 product platform across our entire offering. This is a continuous drive towards industrialization, and we maintain a specific focus on this within the company. We're seeing tangible benefits today, and expect even greater cumulative and compounding advantages as we progress.

Yeah. Thank you very much, Doug. And a follow-up question on the frame agreement with Total Energies. Total Energies, especially in Angola in Block 17, has many tie-back opportunities, but I'm not yet convinced by the iEPCI or am I misunderstood, it's a frame agreement Subsea 2.0, but they're not going yet to the iEPCI concept.

I don't necessarily agree with you, but I don't think it's appropriate for me to comment. I think I'll leave that up to the customer and when we announce our awards.

Thank you. Your last question comes from Marc Bianchi of Cowen. Your line is now open.

Hey, thanks. Just a quick clarification first and I think it's straightforward. But I just want to be sure. The guidance for the second quarter or the outlook for the second quarter was just at the segment level. And if there is any FX up or down in the second quarter, that wouldn't be reflected in the segment so essentially the guidance you've provided excludes any changes in FX. Is that correct?

That is correct.

Okay. Thanks for that. And then, on the orders, so 40% from these smaller customers and then in the second quarter you should get some benefit from a higher services inbound and recognition potentially Yellowtail being recorded in that quarter. It would seem that there is a chance you're may be flat sequentially on the order outlook or at least above what would be needed to kind of be on track for that 30%. So, I'm wondering if that's the right way to think about it or if there were some other unusually positive benefits in the first quarter that would cause the second quarter to be dramatically lower.

At this point, our view of the second quarter strongly supports a 30% increase in our inbound orders. Q1 clearly demonstrates this, with Q1 multiplied by four. I’m not implying anything, I’m just stating that it clearly backs up our perspective. We expect Q2 to maintain a book-to-bill ratio above 1.0, and we anticipate that the second half will also exceed a 1.0 book-to-bill ratio. Therefore, we are very confident in our inbound outlook.

Yes. Super. Thanks so much. Doug, I'll turn it back.

Thank you. Your last question comes from Jean-Luc Romain of CIC Market Solutions. Your line is now open.

Good afternoon. I was wondering how much of your inbound in the first quarter comes from carbon capture project? Is there some or when do you expect your various collaborations, for instance with Talos, to bring about contracts for you?

Good afternoon, John-Luc. Thank you for the question. In the Q1 inbound, there was no carbon capture inbound recognized in that number that we provided. That was a pure Subsea number. The projects with Talos are advancing well. The opportunity set is actually expanding and we are well into the feed study on several projects and the level of collaboration and market impact that our relationship with Talos is having, we're just really, really glad to be partners with Talos and are looking forward to announcing awards in the future.

This concludes our first quarter conference call. A replay of our call will be available on our website beginning at approximately 8:00 PM British Summer Time today. If you have any further questions, please feel free to contact the Investor Relations team. Thanks for joining us. Operator, you may end the call.

This concludes today's conference. Thank you all for joining. You may now disconnect.