Good morning. My name is Melissa and I will be your conference operator today. At this time, I would like to welcome everyone to the TechnipFMC Second Quarter Earnings 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. [Operator Instructions] Thank you. I would now like to turn the conference over to Mr. Matt Seinsheimer. Please go ahead, sir.

Good morning, and welcome to TechnipFMC second quarter 2017 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. Security and Exchange Commission, the French AMF and the UK Financial Conduct Authority. 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. Because this is the second quarter of operation following our merger, we have prepared pro forma financial statements for 2016 as if the merger had been completed on January 1, 2016. Our prior year quarter comparisons are to these pro forma results. I will now turn the call over to Doug Pferdehirt, TechnipFMC's Chief Executive Officer.

Good afternoon, and thank you for participating on our second quarter earnings call. Before I address the second quarter performance, I want to acknowledge that the company filed an 8-K on Monday advising that we would be restating our earnings for the first quarter. We identified years related to the rates used in the calculation of foreign currency effects on some of our engineering and construction projects. I am confident that we have corrected these errors and have made the appropriate changes to our internal controls to prevent this issue from reoccurring. Maryann Mannen, our CFO will provide additional details in her remarks. Moving to the second quarter. I'll give a brief overview of our operational results, discuss our market outlook and provide an update on our key value drivers. Maryann Mannen will then review our financial performance in more detail and update our guidance for 2017 before opening the call for questions. Second quarter results built up on the strong performance we delivered last quarter. Total revenues for the quarter were $3.8 million. Total company EBITDA of $501 million grew versus prior year quarter despite a revenue decline of 22%. This solid performance reflects our strong execution and the impact of the significant actions taken to permanently reduce both infrastructure and product cost. Total company EBITDA margins were 13% with all segments posting significant increases from prior year results. Subsea EBITDA margins were 21.8%, up 490 basis points. Onshore/offshore EBITDA margins were 10.4%, up 590 basis points. Giver the ongoing strength in this segment, we have increased our onshore/offshore margin guidance for full year 2017. And EBITDA margins for surface technologies were 12%, up 910 basis points. Total compared orders for the quarter were 3.2 billion and we ended the quarter with 15.2 billion of backlog. Our balance sheet…

Thanks Doug. I am pleased to report our solid results for the second quarter. On a pro forma basis adjusted EBITDA increased to $501 million up 44% from the prior quarter. Margins improved 600 basis points. We think very good performance when considering revenue declined 22% year-over-year. Diluted earnings per share from continuing operations were $0.45 when excluding after tax charges and credit of $0.10 per diluted share included in these quarterly results or the after tax charges and credits associated with our merger transaction and integration, our estimated purchase price accounting charges and restructuring and other severance costs totaling $65 million. The balance sheet remains strong with a net cash position of $3.4 billion and we will be returning some of this capital to shareholders in the current quarter as we begin our share repurchase activity. Backlog stands at $15.2 billion reflecting the strong order intake we experienced in this period. Moving through our segment results. Subsea reported $1.7 billion of revenue in the period on a pro forma basis quarter-over-quarter revenue comparisons were negatively impacted by lower project activity in Europe and Africa due to reduced inbound in previous years, resulting in lower project backlog coming into the current year. Adjusted EBTIDA for the segment with $377 million with a margin of 21.8% when excluding identified charges of $46 million. These margins reflect strong project execution as we recognize significant project milestones within the business such as Moho Nord, Piombo and Jangkrik. Also contributing to our operating margin performance with our ongoing cost reductions and restructuring activities other highlights from this segment that I'd like to point out would be the strength of the inbound orders in the quarter as they more than doubled sequentially resulting in a book to bill of one. Segment backlog exiting the quarter…

I'm sorry. Are you ready for questions?

Yes, we are Operator.

[Operator Instructions] Our first question is from Michael Rae with Redburn.

Hi there, thanks for taking my questions. The first is just looking at Slide 8 of the presentation the way that you've categorized these projects, it looks like three of them of have grown in size since the 1Q presentation. Does that signify that they've become integrated packages or is there something else going on there? And then I'll just save my follow-ups if that's okay.

Michael, thank you very much for the question. We'll do every quarters, we'll go back and we'll look at the opportunities as we see them. We'll make any adjustments that we believe are important either because of the scope of the project change or the probability the project change. We'll just keep the list updated. It's our way of just trying to give you the most current information that we have in the most current knowledge of the projects. Not necessarily indicating that it's an integrated project because what we're doing here is we're indicating both the equipment package scope as well as the installation of flow lines scope that combine value. So we're not trying to signal necessarily that it is likely to be awarded as an integrated project or non-integrated. Most likely it's more about the change in scope of the project.

Okay. Thanks. And just the follow-up. I mean I'm just thinking back to the share price move since the merger. It's clearly been a bit of a roller coaster. I'm just wondering if you perceive there to be a difference in what you're being asked for by your investors in the U.S. versus Europe and just in terms of the strategy and disclosure and so on and how you're dealing with that? Thanks.

Thank you, Michael, insightful question. In terms of the strategic rationale for the transaction and the understanding of what we accomplished by bringing together FMC Technologies and technique to create technique TechnipFMC, I think it's well understood and well appreciated. There are differences in style and I think what we are doing and I hope that you are able to observe that we have this and then responded to some of the feedback in terms of broadening and changing some of the information that we were able to present last night as well as responding to the needs in regards to putting more disclosures in the press release and attaching the deck as well. So I just think it's important to understand I think all of our investors again deeply appreciate the strategic rationale and are supportive of the change that we're creating to the industry and necessarily change to bring forward projects by significantly improving the project, the economics. There's just different differences in style and I hope that we're making good progress addressing that as well.

Okay. That's great. Thanks very much.

Your next question is from Kurt Hallead with RBC.

Hi. Good afternoon.

Good afternoon, Kurt.

So I wondered that kind of feel on the estimation for the margins going forward for subsea, obviously the run rate being below where you currently are, wanted to get into general senses to why you think margin should come down in the back half of the year versus the way you've experienced so far?

Yeah, Kurt, as I've indicated in past quarters, I mean it's a challenging market and it's a challenging environment and will continue to do everything we can to ensure that our cost structure remains competitive as the market dynamics evolve. That being said as we indicated in our prepared remarks, we did achieve the completion of several major projects in the quarter. We had some benefit to the quarter that also therefore create some additional capacity or potential underutilization in the coming quarter. So I think it's the balance of understanding how our projects are, how we've completed some of our projects, the challenges that we'll have been in the market as we go forward as a result of the timing of the inbound. And important quarter for us as we pointed out $1.8 billion in subsea inbound are tripling what we had in the first quarter and setting us at a very strong position for the first half of the year. But we have to look at that and we have to look at that mix of inbound when it's actually going to be converted in the revenue. We're a broader company now, some inbound we can convert quicker for instance equipment manufacturing then the installation which obviously comes at a later phase. So we have to look at all these things and take those into consideration. And when we did, we felt that we made the prudent decision by maintaining the subsea margin guidance where it was realizing that there are some additional challenges that lie ahead. Finally, we have seen the inbound inflection or the inflection in the inbound excuse me, and we're committed to delivering world class projects to our customers. And as a result of that, we're going to have to make some strategic decisions on bridging some investment and people and capabilities and competencies through this period of time to ensure that we'll be able to deliver these projects world class to our customers.

Great. That's a very detailed answer. I really appreciate that. I think maybe just one follow-up. Can you talk to some of the project awards that you now received year-to-date and some of the ones you expect coming in the back half of the year. Where would you put the inbound? Where would you put the margins on that inbound vis-à-vis with your expectation from the second half of the year? And if there is an improvement to that margin, how much of that margin improvement do you think is due to some of the technologies that you are bringing versus the integrated approach?

Well, the market is not getting any easier, Kurt. So when I look at the second half of the year for those awards that will be if you will four bids and a buy, that marketplace remains very competitive. And there are quite a few you know there are a few of those on the list. We're really focused on and we retain create value for our customers is by early engagement, in other words being involved in the pre-concept, concept, free feed and feed stages where we can introduce technology as you mention and where we can bring forward our full integrated offering. It's on those projects that we can deliver significant value for our customers while ensuring an adequate return for ourselves and our shareholders. So it's a mix. The open market if you will is quite competitive, but we're uniquely positioned because we have the complete integrated offering now is TechnipFMC. We also have new technologies as well talked about that we were able to deploy on a project like ExxonMobil Liza, where it was competitively tendered but we were able to demonstrate that we had the right solution for our customers to meet a fast track delivery schedule. The Coral FLNG project which we were able to deliver is an integrated project, delivering both the FLNG vessel as well as the subsea package as a direct award not as a competitive tender on the subsea portion of that award. So we have these unique positions that allow us to if you will have certain activity that is not exposed to the competitive market including by the way in a very important piece of our businesses the direct awards that we receive from our partners, and then there's the portion that's open to the competitive market. We do everything we can in that situation to demonstrate to our customers where we can bring value in other ways, but in some cases it is just an open competitive tender, and again there's a mix of those on the process - on the opportunity list that I provided.

Hey that's great Doug. Really appreciated. Thanks.

Your next question is from Philip Lancy with Credit Suisse.

Yeah, hi there guys. First question is, Q2 book to bill clearly above one is probably better than I think most of us would have anticipated. I think backlog actually declined several hundred million so is that sort of project cancellation or FX perhaps you can just explain that. And then in addition to that I'd like to understand better the nature of work that you've received that you didn't formally announce to the market, so you know in terms of services tiebacks directed orders from alliance partner you know smaller competitive awards and so on. Can just sort of comment proportionally what the inbound looks like for Q2? Thank you.

Thank you for the question. An important quarter for inbound absolutely seeing a book to bill with one in front of it it's been some time in our industry, so we're very proud of that that doesn't mean that we won't have lumpy quarters going forward. But we are very pleased with the inbound level this quarter. I'm talking a little bit about that inbound you know we had several major projects as part of that inbound as we discussed in the prepared remarks, which is important. But really all of this subsea projects that have been awarded year-to-date because of the breath of TechnipFMC, we've been involved in one way or another and maybe it was a product sale or maybe it was the installation or the subsea equipment or the front end engineering that we're involved in almost all of these projects. You're right to point out that there was a healthy level of two things, one subsea services inbound, which is often underappreciated it's resilient, it's we have the largest installed base of subsea equipment in the world in many basins well over 50% of the installed base, globally we have over 2000 trees 2200 automation and control system subsea, 11,000 kilometers of flexible pipe and 5000 kilometers of pipe. This is a solid platform and for us to build our subsea services offering and ensure our customers the ultimate uptime performance. In addition to that there was quite a few smaller awards as we would refer to in other words below the threshold that we would issue a press release for materiality point of view. And yes, a lot of those comes direct awards from our partner accounts. We work with them proactively they have standardized suites of equipment, which allows them to order equipment in advance of a project to ensure short cycle time and accelerated first oil. I'll pass it over to Maryann to add additional comments on your question on the backlog.

Hey Phil, thanks for your question. So you're absolutely right. There were no order cancellations in any of the portfolio this is just a normal currency adjustments as we move from period to period to bring it to accurate rate. So no order cancellation at all in any other segment, is just the impact of the measurement on that backlog based on the currency.

Perfect. Okay, second question, Doug, I mean understand with the time of the language regarding the outlook you know is a bit softer versus Q1, can you just help us understand the subtleties between the divisions in terms of outlet does onshore/offshore that relatively robust compared to subsea [Technical Difficulties].

I think those projects being awarded will create a certain level of and even this throughout the quarters, throughout the coming quarters in onshore/offshore. But we are tracking very closely a several large projects. And in terms of subsea it's as I've discussed before, I think we given up a strong visibility into the view, again remember that there is a strong foundation from the subsea services if you will kind of reoccurring activity that we have as a result of the large installed base. And as we said, we expect two to three large projects to be awarded in the second half of the year. We continue and I think this is important to have the unique opportunity to have the integrated feed studies, and we have a large portfolio of integrated feed studies, so we now can watch those integrated feed studies as they mature to the point of conversion, and the ability to be able to move those and convert those projects in most cases as a direct award can be quite significant. And just to give you an example, when I look at that portfolio we have over a $1 billion of projects that could be direct award and converted in the integrated EPCI projects in the coming quarters. Finally in terms of restructuring and cost of course, we'll stay on top of it. We continue to look at it. We continue to stay focus on delivering to our synergy targets in regards of the merger as well.

Okay. Thanks so much, and thanks for the additional disclosure this quarter.

Your next question is from Sean Meakim with JP Morgan.

Hi guys, could you just drill into EMR little bit, and we can drill into the increased partner payable relative to the guidance must walk through the mechanics there a little bit and then as we kind of - as we complete the China module deliveries does that also we do some further contingencies released this quarter?

Okay, Sean, thank you very much. So look the mall project very, very proud of the progress by the team this is a massive project, reach several additional milestones this quarter, we talked about delivering the final modules out of Indonesia, and just a few remaining modules to be delivered by the end of the summer - excuse me to be completed by the end of the summer. Delivery takes a bit longer, it's a long route. But they'll be on the water and head in to submit by the end of the summer. So the team has done a phenomenal job and continues to stay focused on first and foremost safety and wellbeing of a very large workforce and meeting the deliverables for our customers. So the mall continues to go quite well when we complete activity at a yard, there's often it doesn't just end when the module shifts, there's always additional closures that need to be done, additional considerations that need to be taken care of. And then and only at that point can we close out that particular yard and move on. And so Sean I just I guess at the point I wanted to maybe make was you talked about some whole back releases, if this is really a project we're just executing very, very strongly. And so in terms of whole back releases there's a lot of the project left ahead of us, I mean there's a lot of work left to be done there's an important delivery milestone, which is the commissioning later this year and we remain very much focused and getting all the modules are still delivered on site and moving forward with all the construction. And again although we're delivering a large portion of the project, there's many other contractors involved delivering different portions of the overall project. And I'll have Maryann add some additional color.

Hey, Sean, thank you. So maybe just a little bit more to add a bit more color to Doug, keep in mind we'll be working on this project for the next several years, this project will you know expand out probably beyond 2019. As you may remember at the end of 2016 we took controlling interest, so you see a bit of a change in the way that we now report our controlling interest with respect to that. So to your question as profitability may improve in the project, it increases the ultimate liability that we will pay to our partner that we establish the liability at the end of 1231 and as we reach key milestones and improve that we record that incremental if you will liability, which will eventually be paid to the partner. And that's recorded through the interest expense line as I called out. We had a similar result in the first quarter of 2017 as well.

Okay. Yeah, thank you for the detail, I appreciate it. And I hope, I was thinking about how the cycle evolving in terms of your relationships with your customers, I mean you are obviously very focused on taking costs out of projects to make economic and help your customers move forward on FIDs within subsea as well and insulation portions as well. As your customers try to take advantage of the current environment, you are seeing some weakening of contract terms within offshore drilling. And I wanted just to get your sense of how contract negotiations are changing the cycle, bring the structure, the types of things that perhaps were part of the contract lifecycle that customers are looking to make adjustments to them? Could you give us sense of how that's evolving?

An important question. When you are in that but I'm calling the competitive or the open market, in an environment as we are in today, it is not only a pricing discussion, it's also a discussion around terms and conditions. So I think you correctly point that out. Again our company is uniquely positioned because we are not solely exposed to that market. We do participate in that market and we will continue to but only at a level of - only at a level that we're willing to accept be that in terms of returns or be there in terms of risk associated with terms and conditions. More importantly when we're talking about partners and we're talking about integrated feed converting an integrated EPCI direct awards, these things are - this is a different discussion, this is a discussion about unlocking the potential of a subsea asset. In some cases, it's unlocking the potential the customer's asset that otherwise would not have been on law. So it's a completely different discussion and we're uniquely positioned to have quite a bit of our exposure in that area not being entirely exposed to that open market. And again there it does come down to relationships, there it does come down to the discipline within the organization and the rigor in the tendering process to be able to, we ensure that we can identify those risks and mitigate those risks before accepting or before tendering on such a project.

That's very helpful. Thanks a lot, Doug.

Your next question is from Fiona Maclean with Merrill Lynch.

Thank you. Yes, it's a Fiona Maclean from Merrill Lynch. I got two questions. The first one is about your synergy target, you've had this $400 million as a target for over a year and since you announce the transaction. We've seen a number of oil service companies further extending their own cost cutting program, so I wondered if you could in light to whether we should expect to see any upside to that 400 number? And then secondly, I just would like to get some clarification around the dividend. You say that we all get some type of confirmation of the dividend or the dividend policy following Q3 results. Does that mean we should expect to get at the announcement on the day you announced the 3Q results or will it be at a different part of the fourth quarter that we get that information? Thank you.

Okay, Fiona, I will start with the second one. So first and foremost, we reached a major milestone which was to receive approval from the U.K. Courts for distributor reserves, so we're now in a position to move forward. And as we indicated that means we can unlock the potential of our share repurchase program which as we announced last quarter, we have authorization from the board of directors or up to USD500 million by the end of 2018. In regards to the dividend what will likely happen is the dividend would be declared by the Board of Directors. So on the day of our board meeting following them declaring the dividend, we would put out a separate press release announcing that the dividend has been declared the record of date and the amount and that would typically be shortly just shortly before our scheduled earnings date.

Okay. Thank you.

Your next question is from Bill Herbert with Simmons.

Thanks. Good morning. Doug, with regard to your subsea customer dialogue, I was wondering if you could just kind of discuss the respective weighting of the variables that are driving project approval, I think clearly you know project economics is one of them which enter place with threshold oil crisis, but I'm just curious as to whether you sense a growing sense of urgency on their part with regard to filling what appears to be a growing supply vacuum over the next three to five years?

Bill, thank you very much for the question. Look, there's always a focus, you know our customers are always focused on ensuring that they're delivering their best returns for their shareholders and ensuring that they're getting the best value out of the project. So there's always that economic discussion. You raise a very good point just six to nine months ago that was the only discussion. And quite frankly, we spent a period of over five, six quarters where you would simply go back you would present and the answer was always thank you very much, can you go and reengineer or can you go and try to drive some more cost out of the project. And that was really the extent of the discussion. It is true that over the last several quarters or couple of quarters to be more specific, the tone of the conversation has been more balanced around first oil, around accelerated schedules, around projects certainty. So projects certainty and schedule certainty has become as important as costs. That's where TechnipFMC is uniquely positioned because we are now the only company who installs subsea - who delivers subsea installed on the sea floor. So that whole schedule certainty that schedule risk that interface between the equipment manufacturer and installation company, which often resulted in variation orders, delays and incurred on the vessels, we now can manage that and we have the full visibility into our manufacturing capacity as well as the vessel fleet, so we can manage that to ensure that we have no downtime and we can drive accelerated and improve - accelerated schedule, accelerate first oil and improved schedule certainty for our customers. So that's clearly been a change in the tone. But there's been another change and I think this is really important…

Okay. And then switching gears to an area where the visibility is pretty crystal lean and that is with regard to the domestic lower 48 fracking frenzy and it just seems that our channel checks seem to be indicating that the visibility for increased capital commitment in terms of new build horsepower is rising fairly considerably, you're getting into more expensive rebuild, reactivation. I'm just curious is to whether I mean you were correct in processing the sort of evolution of your orders over the first half, but I'm just curious as to whether you're expecting increased slope of recovery with regard to inbound for your frac related business for the second half the year?

No, Bill, I think we've actually seen that in the first half of the year. We'll see what happens, but there was a lot of new build activity in the fourth quarter and the first quarter, in front it actually peaked early in the second quarter. We're still at a very high level again and we have a higher install base now, so that's very good from his service revenue, and consumables, replacement, product replacement, but we'll see how that plays out Bill, where we're not necessarily seeing that same scenario when we talk to our customers in that part of our business.

Okay, thank you sir.

And before we go to our last question, I want to apologize to Fiona, I failed to address the question on the synergies it's an important question, we are absolutely committed to our targets of $400 million exit rate to 2018 to be realized in 2019, 50% of that by the end of 2017. Indeed our teams by working together and collaborating together continue to identify synergies and additional synergies above our original expectations. We are focused on delivering those synergies and realizing those synergies and accelerating, the realization of those synergies as opposed to necessarily raising synergy targets. There may be a time and a place, but I think which is most important right now given the industry backdrop of the challenging markets that we're in, is realizing and making real the synergies that our teams have already identified. But rest assured they're working hard and have identified many synergies for us to work on. And I think we have time for one more question.

The final question is from Mick Pickup with Barclays.

Thank you very much for taking my question. Doug, you've mentioned in passing rises in Brazil and Petrobras to put more orders in flexi, can you just update us on where we are on those gas rises and the issues, and some of your competitors I mean talking rigid being more and say going forward especially with the IOCs coming into the market?

Thank you, Mick. So first and foremost what is being experienced is an industry problem, it's not isolated to any of the flexible rise or providers, it's a known problem, the known metallurgical problem that occurs. But it occurs in a very unique set of circumstances, what we've been able to do now by working closely with Petrobras our partner and being the leading provider of the technology is to be able to isolate in which environment that distressed corrosion cracking actually occurs. In addition, we've been able to work with Petrobras to identify both near term in more permanent solutions for the longer term to ensure that the industry still has access even in that isolated - even in that isolated application to this very important technology, the benefit from an efficiency point of view, the benefit from an installation point of view, is significant for these developments. So we remain focused on solving the problem for the industry by working very closely with Petrobras. And I will point out, as I said in my prepared remarks, we did receive a significant order from Petrobras in the quarter for additional flexible rising.

Okay. And as the second question for Maryann, obviously you're executing very well bringing in the cash on the projects, but we're seeing the net debt flat and working capital. How does that to develop this we go to especially considering progress on the Yamal?

Yeah Mick, thank you. You're right, we projected this year that given where we are in the construction phase in Yamal that we would be consuming some working capital this year still what you're seeing actually in terms of the changes in the working capital is largely as we forecast given the progress significant progress being made. As Doug mentioned most of the modules are completed and we're moving to construction site - moving to the construction site is the better, so we are largely on track as we had forecast.

Okay. And how do you see progressing through the year?

We should be similar changes in the fourth quarter as you saw all in the second quarter associated with that with respect to the Yamal.

Gotcha. Thank you.

I'll now turn the call back over to Matt for closing remarks.

This concludes our second quarter conference call. A replay of our call will be available on our website beginning at approximately 8 P.M British Summer Time today. If you have any further questions please feel free to contact me. Thank you for joining us. Operator you may end the call.

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