Bradley Alexander John T. Gremp - Chairman and Chief Executive Officer Maryann T. Seaman - Chief Financial Officer and Senior Vice President Robert L. Potter - President

Igor Levi - Morgan Stanley, Research Division James D. Crandell - Cowen Securities LLC, Research Division Kurt Hallead - RBC Capital Markets, LLC, Research Division John David Anderson - JP Morgan Chase & Co, Research Division William A. Herbert - Simmons & Company International, Research Division Brad Handler - Jefferies & Company, Inc., Research Division Stephen D. Gengaro - Sterne Agee & Leach Inc., Research Division Collin Gerry - Raymond James & Associates, Inc., Research Division William Sanchez - Howard Weil Incorporated, Research Division Douglas L. Becker - BofA Merrill Lynch, Research Division Robin E. Shoemaker - Citigroup Inc, Research Division Ryan Fitzgibbon - Global Hunter Securities, LLC, Research Division

Welcome to the FMC Technologies First Quarter 2013 Earnings Analyst Call. My name is John, and I'll be your operator for today's call. [Operator Instructions] Please note that this conference is being recorded. I will now turn the call over to Mr. Brad Alexander. Mr. Alexander, you may begin.

Thank you, John. Good morning, and welcome to FMC Technologies first quarter 2013 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 10-K, 10-Q, and other filings with the SEC. 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 John Gremp, FMC Technologies' Chairman and CEO. John T. Gremp: Good morning. Welcome to our first quarter 2013 conference call. With me today are Maryann Seaman, our CFO; and Bob Potter, our President. I will discuss highlights from the quarter. Maryann will provide specifics on our financial performance and then we'll open up the call for your questions. Earnings were $0.43 per diluted share for the quarter. Total company quarterly revenue was $1.6 billion and operating profit was $167 million. Subsea Technologies inbounded $1.2 billion of awards in the quarter, which included 26 subsea trees. Segment backlog now stands at $4.6 billion. Revenue for the quarter in Subsea Technologies was $1.1 billion, an increase of 22% over the prior year quarter. As projected, our subsea margins were down sequentially. Our mix of work was less favorable than in the fourth quarter, and we also incurred planned downtime for recertification of one of our intervention stacks. Both of these were anticipated. In addition, we accelerated R&D spending that was originally a plan to occur throughout the year. The industry received a record 238 subsea tree awards in the first quarter. And as a result, the subsea backlogs of all the suppliers continue to strengthen. We're encouraged as the growing subsea market is materializing very much as we thought, and this is supported by the large number of awards occurring early in the year. The industry is on track to deliver another year of significant order growth. Our awards during the quarter included projects from our partners, Shell and Statoil. Growth is coming from increased activity in the Gulf of Mexico, and this is evidenced by the recent Shell award related to multiple developments. With Statoil, we received orders related to their Smorbukk South and Tyrihans fields in the North Sea. We received the industry's first pre-salt manifold award from Petrobras during the quarter. We expect additional pre-salt manifold and tree awards from Petrobras later in the year. In addition, Total has now authorized us to proceed with work on the subsea production equipment associated with the Total Egina development in Nigeria. During the last few months, we've signed subsea service agreements with Statoil, Petrobras and Total. We're providing an array of life of field services including maintenance, modification, refurbishment and offshore technical services for these customers. The service requirements associated with subsea fields are increasing, and we expect that this growth should become an even more significant part of our revenue in the future. Regarding the Petrobras Marlim separation project, the oil-water separation pilot system is now under transition from commissioning to operating phase. Tests on the systems have begun and there were no issues with the system components. We're optimistic the system will be completely operational very soon. Success of this system supports our belief that the future of deepwater developments includes an ever-expanding infrastructure on the seafloor. As the number of aging deepwater wells with high levels of water production increases, solutions like this should become very important to deepwater operators. Turning to our Surface Technologies segment. Surface Technologies' results were in line with our expectations. When compared to 2012, these results reflect the addition of our completion services business, and growth in our international surface wellhead business partially offset by the decline in the U.S. field -- fluid control and surface wellhead businesses. Surface Technologies business was down from the fourth quarter, consistent with the reduced North America rig count. This has negatively impacted the pricing for our frac rental assets and reduced our volume of fluid controls, specifically revenue associated with the pressure pumping capital expansion. Also sequentially, we saw increased activity in our completion service businesses -- business as it benefited from the first quarter pickup in Canada. Canadian breakup will materially reduce our activity from completion services during the second quarter. U.S. rig count was stable during the quarter and we expect to see some improvement in the U.S. rig count as we progress through the year. International service activity was strong during the quarter as rig counts were up sequentially, and we continue to perform well in both the Middle East and Europe. Looking forward, the subsea market is growing as we projected, evidenced by the significant number of first quarter awards. The industry is trending towards a record number of tree awards for the full year. Margins in our subsea backlog continue to improve and will be reflected in our results in the second half of 2013. Our investments to expand our capacity over the last few years have prepared us to execute on this increased level of activity. Maryann will now take you through some of the financial details for the quarter. Maryann T. Seaman: Thanks, John. Subsea Technologies' operating profit was $99 million in the quarter with a margin of 9.1%. Margins in the quarter are partly the result of a lower contribution of subsea services work as we anticipated. Aftermarket service activity was down in the fourth -- first quarter as one of our well intervention stacks was out of service for required industry certification, and the North Sea experienced its seasonal decline in activity. Also in the quarter, we accelerated development and qualification efforts. These activities relate directly to furthering our subsea processing technologies and advancing our well access systems. Both of these actions support our strategic growth platforms in subsea. These accelerated investments increased costs in the quarter. We elected to complete the work ahead of planned schedule to further our processing capabilities for future opportunities. The overall spending associated with these developments was planned to occur throughout 2013. As a result of this decision, we should now experience lower spending in the back half of the year. As John mentioned, we have started work for Total on the Egina project. A decision to mobilize the project team ahead of this action and maintain readiness for this award resulted in higher-than-expected cost with lower revenue and margin contribution in the quarter. Our subsea mix should improve during each of the remaining quarters this year as the margin profile of our project revenue improve. We expect to see subsea revenue growth in excess of 10% this year and full year subsea margins should average 13%. The back half of the year is expected to be much stronger than the first half as we benefit from the lower spending and stronger margin projects. Moving on to our Surface Technology results. Surface Technology operating profit for the first quarter was $57 million, a 27% decrease from the prior year quarter. As we expected, we saw the decline of fluid control activity and volume in the first quarter as a result of curtailed frac capacity expansion. Also contributing to the quarter-over-quarter profit decline was a less favorable pricing environment related to frac rental assets within our North American surface wellhead business, offset in part by stronger performance from the international markets. The contribution of our completion services business improved our year-over-year sales volume and profit. Sequentially, international surface wellhead quarterly sales were strong with heavy activity in both the Middle East and Europe. We experienced the anticipated decline in fluid control activity, which impacted our margin performance. Our completion services business delivered solid results as its best performance comes in the first quarter, given its exposure to the Canadian market. Margins in the quarter were 13.6%. This was consistent with our expectation of seeing margin degradation during the first 2 quarters of 2013, followed by some improvement in the back half of the year. This is dependent on the North American activity showing some improvement in the third and fourth quarters, which would drive increases in repair and replacement sales for fluid control. Orders for Surface Technology for the quarter were $449 million as international surface wellhead orders had their strongest quarter on record. Backlog exiting the quarter stands at $522 million for this segment with the year-over-year reduction coming from the absence of capital orders for fluid control equipment, offset partially by growth in international surface wellhead orders. Energy Infrastructure operating income for the first quarter was $10 million with margins of 7.4%. We still expect full year operating income to increase, driven by improved results in loading systems and separation systems with full year margins averaging about 10%. Now for our corporate items. Corporate expense in the quarter was $10.3 million. We expect this number to average between $12 million and $13 million per quarter for the remainder of 2013. Other revenue and expense, net, reflects the expense of $17 million. We expect this to average approximately $20 million per quarter in 2013, subject to foreign exchange fluctuations and any MPM earn-out adjustment that may be required if results in 2013 outperform our current expectations. Our first quarter tax rate was 21.9% as we benefited from the retroactive impact of changes in U.S. tax law enacted in January, which reinstated an extended certain provision. We expect our 2013 tax rate to be between 26% and 28% for the full year. Capital spending this quarter was $79 million, primarily directed towards Subsea Technologies' expansion initiative. We continue to expect capital spending in 2013 to be approximately $400 million. In Surface Technologies, our limited capital spending was directed towards expansion of our flowback services within our completion services business. At the end of the first quarter, we had net debt of $1.4 billion. It was comprised of $237 million of cash and $1.7 billion of debt. We averaged $239.4 million diluted shares outstanding in the quarter. We repurchased 570,000 shares of stock during the first quarter at an average cost of $47.32 per share. So in summary, subsea margins in the quarter were lower than we originally expected as we accelerated development and qualification spending for subsea processing technologies and well access systems while incurring costs related to assembling the Egina project team. Margins associated with Surface Technologies were in line with our expectation as our business performed well. Looking forward, we are confident regarding subsea inbound in 2013 as both the market and FMC should experience record volumes. We expect subsea margins to improve as we progress through the year averaging 13% for the full year and Surface Technologies' margins should trough in the second quarter as a result of greater exposure to Canadian breakup and then begin their improvement in the second half of the year. We are maintaining our full year earnings guidance in a range of $2.05 to $2.25 per share. Operator, you may now open up the call for questions.

[Operator Instructions] And our first question comes from Ole Slorer from Morgan Stanley. Igor Levi - Morgan Stanley, Research Division: This is actually Igor Levi filling in for Ole. So it looks like you're getting ready to start the system at Marlim. It's done with commissioning. Could you talk about a little bit about the results you've seen there so far in that commissioning process and the implications you see on the subsea processing adoption from this technology working successfully? John T. Gremp: Igor, you're right. The Marlim pilot, which is the world's first water-oil separation and reinjection in deepwater, reached a very critical milestone within the quarter, and that's shifting from commissioning to operational mode. So it's -- yes, it's pretty exciting. There have -- this system is complicated, it involves almost 20 new technologies that went through extensive qualification and each of those technologies had to be integrated in a complex system. So for this pilot to shift to operating mode is a very big deal. There were no issues associated with the operational performance. This is a big success for Petrobras so I really need to let Petrobras, at their time, comment on more of the details around Marlim. But with regard to implications, you are right. The -- I mean there are implications for Petrobras because of the nature of the Campos field and the large water cut. The large population of older subsea wells in that basin, they're really dependent upon new technology to boost production and improve the reservoir recovery rates. So this is big for Petrobras. There's implications with this technology. The implications are that this technology will be used by Petrobras. The pace of which they do that and how they assess using this new technology now it is becoming field proven is really up to Petrobras. But, Igor, I also think it has implications for the industry at large. Any time you have this kind of technology in a commercial application that's proved out successfully, it means that the industry will start to adopt it. And of course, that's what we're counting on as we continue to make investments in subsea processing technology. Igor Levi - Morgan Stanley, Research Division: Yes. So it looks like another big step for subsea processing here. And just following up on the same topic, it looks like the Moho Nord, the subsea equipment package, we have earned an award for that. So now we're waiting for the subsea boosting package. And I think the other one is the Eni -- I think it was 15/06 that were also waiting for a subsea boosting. Could you talk a little bit about kind of the timing? Is that tender expected to be out in the first half of the year? And kind of what we should expect? John T. Gremp: Right. Well, you're correct. Both of those projects, Total Moho and Eni 15/06, are the 2 big commercial subsea processing projects that are likely -- that will be -- we believe will be awarded this year. The tendering has already been done and we expect that the Total Moho award is imminent; Eni 15/06, later this year. So we fully expect both of those awards to be made this year. Now this will be the second subsea processing project for Total, but it will be the first for Eni. Igor Levi - Morgan Stanley, Research Division: Great. And just to be clear, you guys are qualified for both of these? John T. Gremp: That's correct.

Our next question comes from Jim Crandell from Cowen. James D. Crandell - Cowen Securities LLC, Research Division: John, this is kind of a conceptual question. But today, we have something like 118 deepwater and ultra-deepwater rigs drilling and we have another 85 under construction. Certainly, the subsea tree orders reflect drilling that was done years ago and you're looking at an 80% potential expansion of the fleet. What do you think that means looking out several years for the potential of subsea tree orders worldwide? John T. Gremp: Well, Jim, when you look at the backlog of deepwater discoveries, which keeps growing each year. In 2012, there were -- it was another increase in deepwater discoveries and a backlog of over 300 deepwater discoveries that have to get developed. I think it supports the growth in deepwater rigs to get this done. It also supports continued exploration in the deepwater environment because that's where hydrocarbons are. So I think this is all consistent with the story that the operators realize and I guess the rig operators understand that this potential is out there, and they're going to need to meet demand by increasing capacity. So I think it's all part of the same story of deepwater development growth. James D. Crandell - Cowen Securities LLC, Research Division: I mean, is it -- John, is it right to think about the level of subsea completions today more indicative of drilling that happened, let's say, 3 to 4 years ago? And could we actually be looking at levels of subsea completions? Do you think in 4 to 5 years of 1,000 per year? I mean, is there -- that significant growth just because if you compare the growth of the deepwater rig fleet and then assume a certain percentage make the discoveries, it would seem that you should be looking at that number of subsea tree orders looking out. John T. Gremp: Surely, the subsea market is going to grow for all the reasons that you suggested, the continued exploration success and developing the backlog of discoveries. The pace at which it grows, Jim, is going to be dependent on lots of constraints, how many -- how much of any operators deepwater portfolio, can they develop within any given year and over time. And so I think that will be kind of the governor on the pace of growth. It'll be the ability for the industry to develop these many projects at any given time, and that's a little -- just like FMC, we're ramping up our capacity. Others in the industry are doing the same thing. And if the pace of that ramp-up can match the available opportunities, then it'll grow at that rate. But there's no question that there is growth. It'll just be the pace of which these new discoveries are developed and I think that will be driven by just addressing constraints.

Our next question comes from Kurt Hallead from RBC Capital Markets. Kurt Hallead - RBC Capital Markets, LLC, Research Division: Question for you, Maryann. With the accelerated expenditures in the first quarter of the year and the fact that you guys staffed up and prepped '14 in advance, if you had an accelerated expenditures, so what -- what was that impact on margins? Maryann T. Seaman: Yes, Kurt, as I said, we certainly expected our margins to decline, but we didn't expect the sequential decline quite as what we saw. I would say difficult to give you an exact number, of course, but -- and you know we don't give quarterly guidance, but we expected the back half of the year to be stronger, initially. We continue to expect that to be stronger. The key difference here for us was the mix. And in the services area, the decline, which impacted the plan, impacted the sequential decline. The R&D costs were accelerated from the back half of the year. They're expected to be completed in the first quarter and we'll see that savings in the back half of the year. So again, margins were expected to be stronger than what we had initially -- what we printed, but we're also going to assume that the sequential improvement occurs in the second quarter, but again, much stronger in the back half. Kurt Hallead - RBC Capital Markets, LLC, Research Division: And then, John, for you. You indicated that your margins in the backlog continued to improve. I'm wondering if you might be able to give us some context around that. Are margins for subsea work now at and/or above where they were at the prior highs heading into 2006, 2007? John T. Gremp: The margins are not at the prior highs in backlog because our backlog margins are in transition. We're transitioning from and flushing through lower margins of the projects that were incurred during the down cycle. They're being replaced by projects that we won -- now, this is in backlog -- projects that we won last year, which was this transition period. We hadn't seen the awards at much higher prices. We hadn't seen the backlogs of our competitors, the other suppliers fill up. So -- but everybody saw that the market was increasing so that was reflected in the pricing. Going forward, the awards that we're going to see later this year into the next; year, they're going to reflect the market with backlogs that are largely full and more growth and so that will be at an even higher level. That's the kind of pricing that we saw in 2008, so we're not there. So it would be unfair to look at our backlog, which is a mix of pricing that occurred through this transition and say it was the same as what we saw in 2008. Is it better? Obviously, they might say that the margins have improved from where we were a year ago and even 2 years ago. But I wouldn't say the margins in backlog are all at the peak pricing we saw in 2008. Kurt Hallead - RBC Capital Markets, LLC, Research Division: Right, right. But your -- what you see physically coming is going to indicate an acceleration in the margin and backlog as you exit this year? John T. Gremp: Absolutely, and that's what drives us. As Maryann said earlier, that's what drives the margin improvement in the second half. We're flushing out as we did in the first quarter and we'll also do in the second quarter lower-margin business projects like CLOV. They're getting flushed out in the first half, a little bit in the -- into the third quarter, being replaced by higher margins, and that's going to be reflected in our backlog. It'll be reflected in margins to flow through the P&L late this year. And it'll go into those -- it'll go into the eventual margins that support 2014 business.

Our next question comes from David Anderson from JPMorgan. John David Anderson - JP Morgan Chase & Co, Research Division: Kind of stay on that margin topic just for a minute here. In order to get to your 13% margin guidance, it looks like you're going to have to do something like 15% margins in the fourth quarter. Can you help us just to understand kind of how this progression happens because we haven't really seen margins like that? I understand you're saying you're flushing out kind of older, kind of lower margin stuff, but is that the direction we have to go? John T. Gremp: Yes. Absolutely, David. I mean when we look at our margins in backlog and how it's going to flow through the P&L, the higher-margin business, which we received later last year as the market was improving, starts to show up in bigger ways in the P&L as we move to the S curves of our project. And those show up at the end of the year and they start to get to the margin numbers that you just illustrated. Also, keep in mind that our subsea services grow -- is going to grow anyway, but we also get that vessel in that intervention stack back in service in the second half plus, as Maryann mentioned, that acceleration of R&D spending, we're taking it out of the back half and moving it to the front half. All of those contribute to higher margins. But let me turn it over to Maryann to give you more color on the margin progression, the roadmap for better margins in the second half of the year. Maryann T. Seaman: The other thing is, of course, our lower-margin projects like CLOV, Laggan-Tormore, while more heavily weighted in the first quarter, Laggan-Tormore's essentially completed and CLOV is more heavily weighted in Q1 and Q2. So as John said, we replaced these lower-margin projects with stronger-margin projects. And of course, because of the volume in the back half of the year, we see better absorption as well. So lower cost, better absorption, higher contribution from our services, better mix of projects flowing through in the back half of the year. John David Anderson - JP Morgan Chase & Co, Research Division: So that services mix, is that sort of like an aftermarket margin business that's considerably higher than your core business? Maryann T. Seaman: That's right, David. It's what we consider our aftermarket so it includes, of course, our commissioning as well as all of the other work that we do, repair and maintenance, and some growth obviously that we'll be seeing from Statoil. We talked about that. I think, on the last quarter, Statoil has got a nice backlog of opportunity for repair and replacement of their trees. We'll see that flow through as you saw the announcement earlier in the month on the contract with Statoil. And similarly, of course, we've signed some services contracts with Petrobras, as John mentioned, and Total as well. So we'll see some -- we will certainly see some growth in the services component of our business this year. John David Anderson - JP Morgan Chase & Co, Research Division: Okay. And a different topic. We've seen Woodside canceling an L&G project not too long ago. BP's decision on to push back Mad Dog, I think, had some investors kind of wondering what's going on with the thought process on them. I was wondering if you could specifically talk about Mad Dog, how that impacts your business? But more importantly, kind of what's behind these decisions? It doesn't seem to be a function of capital equipment inflation. So is this more on the EPC side that they're struggling with? John T. Gremp: Right, good question. With regard to Mad Dog, we announced initial call off from the Mad Dog project that was relatively small compared to the entire project. That's actually in our backlog. Three weeks ago, we were advised by BP to spend work on Mad Dog. It's still in our backlog and it will remain in our backlog because per BP, Mad Dog is "excellent resource." They are fully committed to developing Mad Dog, but their development plan is not one they want to go forward with right now. They would -- well, they want that plan reworked and they're anxious to rework the plan, the entire development plan, to make the field more economical in their minds. They've asked us to actually help them with reworking the plan. So the Mad Dog is on pause right now. What was behind that? I think it was the nature of their plan. As you say, I mean, the plan in their minds was not as economical as it needed to be or they believe that it could be and they want the plan reworked. That's not completely uncommon in the industry. Fortunately, it doesn't happen all the time, but it's not completely uncommon that the original development plans get all the way to the final investment decision and things change and they decided to rework the plans. Usually, it results in a kind of postponement or deferment of the project while the plans are reworked. But in most of the cases or maybe all the cases I can remember, eventually, the fields get developed. They just get developed in a different way than what's originally envisioned. That's what's happening on Mad Dog. I can't really speak to the Woodside deferment, I mean, with LNG plans. I think you've got a lot more elements that could be driving to be markets. It could be contract for gas, et cetera. So I can't speak to that. John David Anderson - JP Morgan Chase & Co, Research Division: Okay. But it's not -- this is kind of more of a one-off as what you're saying on Mad Dog? This is very specific to this field. This isn't sort of a change in philosophy that you're seeing there. I just want to make sure that's not what you're seeing. John T. Gremp: Absolutely. And I think you can just look at the evidence of the big West Africa projects that are going ahead. And we talked to BP about their big deepwater portfolio. They're proceeding on elements of their portfolio. This is unique to Mad Dog.

Our next question comes from Bill Herbert from Simmons. William A. Herbert - Simmons & Company International, Research Division: John, to start with you, your commentary on Egina was cryptic and also tantalizing. So what exactly does it mean now, your statement on Egina? John T. Gremp: What it means is we now have a green light to proceed with the project. So as Maryann suggested, we've had teams -- well, I mean, Egina is a project that's been out there. It's been delayed, a little bit frustrating for us because we've been preparing for Egina. We want to execute well and we've mobilized teams. We've been doing work and we haven't been able to actually proceed with that work. Now, we have authorization from Total to proceed. So the teams that we've had mobilized are now engaged and doing the work on Egina. There -- what will happen later in the quarter, there will be an announcement from us and from Total that lays out the entire contract value and all the specifics. That Total -- we're not prepared to do that now, but that will come later in the quarter. What -- so I apologize if sounded cryptic, but the important thing is the major project for the industry and for our company is now got a green light to proceed. So that means the clock starts ticking on delivery. It means that we can start booking revenue. We can engage our resources to proceed with the design and production of that equipment. So it's a bit of a... William A. Herbert - Simmons & Company International, Research Division: And what's the impediment to actually sign the contract, if there is -- I mean, if that's even the right word? Is it basically just dotting Is and crossing Ts or is it more than trivial... John T. Gremp: No, no. Definitely that. No, no, no. It's just being -- it's just timing of our earnings call versus when they're prepared to authorize a formal announcement. William A. Herbert - Simmons & Company International, Research Division: Okay. Well, that's great news. Maryann, to go through with you, the components of your revenue guidance for a second on subsea. You mentioned that subsea revenues up 10% for the year, correct? Maryann T. Seaman: That's correct, Bill, yes. William A. Herbert - Simmons & Company International, Research Division: Okay. And so those components would be, if memory serves, backlog conversion, 60% out of backlog coming in into the year, $1.2 billion of customer support and booking churn in the vicinity of $500 million to $550 million. Are those roughly the building blocks for the revenue generation for this year? Maryann T. Seaman: That's correct.

Our next question is from Brad Handler from Jefferies LLC. Brad Handler - Jefferies & Company, Inc., Research Division: I guess I'll please take the margin conversation one step further and see how much we can discuss 2014 and recognizing it's very early in the process. But the suggestion seems to be that we're exiting at a very strong margin rate. And then perhaps, depending on, I guess, service revenues and R&D expenditure that the margin expectations for '14 might even be stronger than I think our prior conversations have led us to. Can you offer some -- I think you probably know what I'm suggesting. Can you offer some thoughts on that? John T. Gremp: Yes, I'll start, Brad, and ask Maryann to add to my comments. You have to remember that our backlog is made up of a wide variety of margins even in an upcycle. And we've got very attractive projects that flow through at a heavy rate in terms of P&L revenue in the third and fourth quarter this year. I think you get into 2014 and we understand we're talking about these extra rates of margins for 2000 -- the end of 2013, how do they flow and improve as we go into 2014. You just have to remember that in 2014, we'll have a whole mix of projects. And I think we still believe and maybe it feels conservative, given what we've been -- just talked about. But we still believe that the margins in 2014 will be in the mid-teens. Can they be better than that? Perhaps. But remember, we'll be operating the full force of all of our projects that are in backlog, and they don't all carry the same margin. And so it's that mix that will occur throughout '14 that links us to the mid-teens margin projection for 2014. But I'll let Maryann comment on other aspects of 2014 margins. Maryann T. Seaman: So just to confirm, as John said, yes, we feel pretty strongly about sort of the back half of the year. And clearly, the exit rate in and around that 15%, as we said, which means obviously, if we work backwards from the first quarter, again, we'll see some sequential improvement in the second quarter. But we won't quite get to those margins until we've seen the back half of the year. So understand the sequential improvement that we're seeing a little early yet. I mean, as you've heard, we've got -- Egina has been delayed. We'll see some shifting obviously from revenues and margins from '13 to '14. But that back half of the year, we feel pretty confident in delivering and clearly should be the exit rate that we are able to achieve for '14. Brad Handler - Jefferies & Company, Inc., Research Division: Okay, all right. Well, it's helpful color. I appreciate the thoughts. Maybe I'll switch gears. We haven't talked about the U.S. market very much yet. But perhaps, you can give us a little bit more of a sense on the progression within fluid control. In a sense, perhaps, how much of your customers may still be in the process of working through some inventories or do you feel that process is complete at this point? I think I have heard that, but I want to make sure that it is, and then in a sense, what your outlook is for the next couple of quarters with respect to volume on the fluid control side and then also on the frac rental side? John T. Gremp: Brad, I'll give you some high-level remarks and then let Bob Potter talk more specific about what we're hearing from the customers. The -- we have confidence -- as we said in our remarks, we have confidence that the rig count will improve later in the year, and we will see that in our surface wellhead business and we'll see it in the consumables of fluid control. What we are not seeing and what we don't anticipate seeing throughout the entire year is the capital expansion spending for fluid control. And you'll recall during the peak of the pressure pumping business, that percentage of capital orders that we received in fluid control was as much as 75% of our total. We don't see that happening. It's not happening now and we don't see that happening between now and the end of the year. So that recovery, we won't see, but we will see an improvement in the consumable portion that follows rig count. But I'll let Bob talk more about what we're hearing from customers and maybe when we anticipate that capital spending will happen. Robert L. Potter: Yes, more directly to your question though, the what we call cannibalization of their existing assets is really coming to a close. A lot of factors including the return to 24-hour frac-ing, more stages that we're seeing, more frac intensity, some of those things that are material impacts on the longevity of the equipment are happening. And so I think your question was specifically around, "Is the cannibalization of assets coming to a close?" We think so. We think most of the major service companies have stripped their equipment, the idle equipment, down to the chassis. So we should see an improvement in the second half of the year as a result of that along with what John talked about in terms of increased well count, driven by the rig count improvements that we anticipate. Now capital spending. I really don't think we're going to see much impact of capital spending are increasing the amount of hydraulic horsepower probably until 2014. Don't expect it this year.

Our next question comes from Stephen Gengaro from Sterne Agee. Stephen D. Gengaro - Sterne Agee & Leach Inc., Research Division: Really, 2 follow-up questions. The first, and I'm not sure how much you want to comment on this, but on Egina, how do we -- how should we think about that and the impact on margins given the size of the project and some of the historical issues we've seen? How do you protect yourself there? John T. Gremp: Well, first of all, the Total Egina project is in Nigeria. We've been successful on our Nigeria projects reference Chevron Agbami, where we did the highest level of local content. It was a successful project for us. So we've been prepared for the Egina project in Nigeria so we feel -- I mean, there's always risk in any major projects certainly in West Africa. But we feel very prepared to manage Egina well. As you know, we had -- we look at Egina as a project very similar to Total's Pazflor project, which was delivered on time and very successful. And this thing, the Egina looks very much like that. We've had a really good head start in terms of getting prepared to launch this project well. And then again, as I said, our experience in Nigeria is going to be helpful in terms of executing the project. Now where are we in terms of pricing? The Egina project was bid over 1.5 years ago. And although it didn't reflect -- the bid prices didn't reflect the trough of the market we were in, they also didn't reflect the peak of our market that we expect. We were in transition with regard to cycles and the pricing. The Egina pricing reflects that, better than the trough but not as high as the peak because the other suppliers were bidding and hadn't filled up their backlog. I would characterize the Egina margins as similar and reflecting the improving margins that I described in our backlog as a whole. Stephen D. Gengaro - Sterne Agee & Leach Inc., Research Division: Okay. Now that's helpful. And then as a follow-up on the Surface side, this will be your first sort of transitional first quarter to second quarter with the Pure acquisition involved. Maryann, can you give us some sense for how we should think about the incremental margin impact from that in Canada? Maryann T. Seaman: Yes. Clearly, our second quarter will be the weakest quarter in Surface. We will see a fairly significant decline in the margins in the second quarter, and then back half of the year recover. On a full year basis, given the forecast that we're seeing, we ought to expect to see margins somewhere in the neighborhood that we have seen in the first quarter, assuming volumes hold up. But we will see that decline in Q2, which means back half will be stronger.

Our next question comes from Collin Gerry from Raymond James. Collin Gerry - Raymond James & Associates, Inc., Research Division: I just had a quick one on working capital. It seems that it was another drawn cash this quarter. Could you give us maybe a little bit of color on the progression of working capital as we go through the year? Maryann T. Seaman: Sure. Our first quarter was -- it may be a little bit worse than what we had expected. We've got a couple of projects as we talked about CLOV, Laggan-Tormore that we are completing. And as we see those complete, a lot of that activity pushes a lot of the receivables through. So we expect to see that come through in Q2. The other offset that we'll be seeing in 2 and 3 will be advanced payments from some of these fairly significant awards. So we are -- first quarter, a little bit softer than we expected, but improving. We've got, as I mentioned on the last call, we've got some performance work that just efficiency that we're completing. And actually, this year, one of the changes that we've made is all of our senior leadership will now have a performance metric associated with the working capital efficiency. So we do expect to see continued improvement, most of that, Q3. We will see some in Q2, but we're expecting a similar level. I think I've mentioned them last time we spoke together as a group, somewhere in the neighborhood of about 50% reduction. Given the timing of some of these awards, we may soften off of that, but we are still expecting a significant reduction in that debt by strong cash flows that we're expecting. Collin Gerry - Raymond James & Associates, Inc., Research Division: Interesting. And so the petition about the performance metrics in terms of management. And if we think about the last 3 years as it has been a growing market, working capital has been a drawn cash. I mean we are still very much in a growing market as you've outlined. I mean as we think about the next 2 years, I mean we should still see that'd be a net drawn cash, I think. Or does it actually reverse? Maryann T. Seaman: Yes. This year, we obviously will reverse because we had some struggles. But as we go forward and that volume increases, working capital will, of course, just based on that volume associated with that grow. Collin Gerry - Raymond James & Associates, Inc., Research Division: Very helpful. And then just to beat the dead horse on the margin conversation a little bit. Quick follow-up question, within all the projects you have within your backlog, obviously, to what degree each project contributes to revenue affects the mix and that ultimately gives us our margin? I'm curious, what is the range of that margin? In your backlog, if we did 9% this quarter, is it somewhere between 7% and 11% range? Or is it much wider than that in 2 and 20 between all the various projects that we're working on? Maryann T. Seaman: Yes. In terms of the margins in the backlog, one way to think about this as you look at it going forward, when we typically think about a project being roughly a 3-year cycle, obviously, some are longer and some are shorter. But in the early stages of a project, we typically get about 10% of revenue. In the second year, we'll probably get about 50%, and in the third year, the remaining. So as you think about the last couple of years coming off of '08 and '09 and then the inbound that we are receiving, a lot of the backlog that we are flushing through this year, if you will, or we are recognizing this year comes from sort of that '08, '09. So we have some lower-margin projects in that backlog being offset by projects that as John has mentioned as we see pricing improved. So there is a reasonable range in the margins in the backlog as you can see from the variabilities as we recognize revenue in the last couple of quarters. John T. Gremp: Collin, maybe at the risk of stating the obvious. When we have a problem project and we've had some. We've talked about them last year. The range of margins between a problem project, where we're having execution issues and our average in backlog is quite broad, I mean it's a big range. Absent an execution issue, the ranges in our margins is fairly modest. So it really depends. If we have execution issues, the range can be pretty broad than what the margins are. As we improve execution, the range will narrow and it's much more modest. They're obviously not all the same, but it's -- the big difference in range of margins in our backlog has to do with execution issues. Collin Gerry - Raymond James & Associates, Inc., Research Division: And that's kind of what I was asking, so that's very helpful color.

Our next question comes from Bill Sanchez from Howard Weil. William Sanchez - Howard Weil Incorporated, Research Division: John, on subsea, I was curious now that you're a quarter in and you've been greenlighted here on Egina. Can you give us a sense, if at all, what kind of expectation maybe that you have as far as total orders this year in subsea? Are you able to quantify that other than just saying, "We expect a record at this point?" John T. Gremp: Right. Well, we had a record number of inbound orders last year at $4.6 billion, and I said in the last quarter, I thought we could meet or exceed that. Hitting $1.2 billion in inbound, relatively a small portion of that was BP is a good sign, adding Egina on top of it, which there's been estimates around that number, certainly helps us on our way to meeting or exceeding the inbound -- the record inbound that we received last year. Now where will that come from? The small orders, remember the $1.2 billion that we received this year was really absent any mega order and that's kind of been a trend coming from our partners, I mentioned that in my early remarks. And we expect that to continue. To be significantly higher than last year's inbound, we will need to capture a couple of good-sized projects. And they're out there and we're bidding them. They're well into the tendering process, but we'll have to be successful and they'll have to stay in 2013 and not to shift to 2014. The service revenue is expected to grow. That will contribute. So I would say we are on pace to exceed the inbound number last year, given the strong inbound and obviously the Egina award. How much further over? We've got to get a little closer to these big projects because we'll have to win a couple of big projects to go well over the $4.6 billion. William Sanchez - Howard Weil Incorporated, Research Division: Okay. And given your earlier comments on Mad Dog, I mean, my understanding was if that was going to be awarded to you in several tranches, I'm assuming we should just -- whatever expectations we have for that this year and next, that should just go ahead and be essentially taken out of our numbers at this point. Is that fair? John T. Gremp: Yes, that's correct. William Sanchez - Howard Weil Incorporated, Research Division: Okay. One other question is just on the subsea services side. I know you've talked about a significant improvement revenue over the coming years that you anticipate in that business for you. I guess, one, just can you talk on the well intervention side? At what point maybe do we see start making some incremental investments in terms of new capacity there to meet that goal? And two, you had the downtime on the 1 unit this quarter. The 2 remaining, should we anticipate any kind of maintenance or commissioning inspection work that takes place on those vessels here over the balance of the year? John T. Gremp: Well, let me take the last question first. This was the plan of maintenance and recertification. So just to be clear, this wasn't downtime. It happens every 5 years by requirement. We don't have -- The first unit that got recertified was built well ahead of the other 2 units that we have in service. So they're not planned for recertification this year or next year. With regard to the other part of your question, additional investments in service to support the anticipated revenue growth. Our fourth stack is in design and manufacturing as we speak. So we're already initiating additional investment to support future service revenue, and that will be available on the market next year. The investments beyond that, we want to -- it's based on customer demand and we want to wait until we have a lot of confidence that once that -- the new stacks get built that they'll have long-term contracts. And I would envision that we'd make some of those decisions later this year as the market develops as we anticipate. I might remind you also that our joint venture with Chouest is going well. We're getting a lot of confirmation from our customers of this package. And particularly in the Gulf of Mexico, a vessel in our intervention technology is being a good package that the industry really wants. So I think we'll get -- that will support the idea of operators being willing to sign up for longer-term contracts and support future investments in intervention stacks. William Sanchez - Howard Weil Incorporated, Research Division: John, does that force the unit ultimately go into the North Sea as well? Or do we start seeing this service expand into other geo markets? John T. Gremp: Actually, we're building the units so they can operate outside of the North Sea. So it really targets -- it will be the first deepwater intervention stack that we're developing, and it's really targeted for the Gulf of Mexico and West Africa. So to be specific, we don't anticipate it being used in the North Sea.

Our next question comes from Doug Becker from Bank of America Merrill Lynch. Douglas L. Becker - BofA Merrill Lynch, Research Division: John, we've seen Petrobras award some sub tree orders to competitors. FMC won the subsea manifolds, or with a handful of subsea manifolds. Does this have any implication for the call-off work on the subsea tree contracts signed last year with Petrobras? John T. Gremp: Well we don't think so. The largest Petrobras pre-salt order was won by us almost 2 years ago. And following that, it took a while -- I'm sorry, it was about 1.5 years ago. Following that, we anticipated that more call-offs and awards will be given to other suppliers. That's happened. The remaining call-off with Petrobras all indications are that they would proceed with that. So now it doesn't -- this was all -- this was exactly what we expected and it's unfolding pretty much like we hoped to. And I think these awards, what's maybe we should be talking about is the significance of these awards. There was a time not too long ago where people were concerned about Petrobras' cash flow, new purchasing rules, which was going to pace the awards for pre-salt equipment and that's not happening. I think Petrobras recognizes the criticality of having this hardware available as they develop their pre-salt discoveries and they're getting the stuff on order. And not only was that evidenced in the quarter by additional tree awards, but it was evidenced by the first pre-salt manifold award which we want. So I think it's really just the opposite that Petrobras has come to a conclusion. They need to have the hardware so it's not a -- it stays off a critical path through developing pre-salt. So we're anticipating that Petrobras will award the remaining call-offs on our original record Petrobras contract. Douglas L. Becker - BofA Merrill Lynch, Research Division: And it definitely sounds encouraging. Is it reasonable for us to have those in our 2013 order estimates? John T. Gremp: I think so. It's Petrobras so there's -- the things don't always happen exactly like your original plan and schedule, but we're targeting for those call-offs to happen this year. Douglas L. Becker - BofA Merrill Lynch, Research Division: Okay. And one more Petrobras question. I guess, in the past, they've talked about over 70 wells in the Marlim field that might be potential targets for subsea separation technology. Is that still kind of the order of magnitude that we're thinking about the Marlim subsea separation opportunity? John T. Gremp: Yes, nothing has changed with regard to the potential. I think the big -- now that the system is operational and Petrobras has a chance to really assess the pilot system, that's when we're going to see Petrobras do the analysis of how much could they apply this to Santos and Campos Basins. So I think that's all. I have -- you're absolutely correct. Nothing has changed with regard to the potential of the Marlim system.

Our next question comes from Robin Shoemaker from Citi. Robin E. Shoemaker - Citigroup Inc, Research Division: I wanted to ask you about the -- you said the total number of tree awards in the first quarter was something like 238. And so your awards are considerably below your historical market share. And I know you look at this on a yearly or a rolling 3-year basis. But I just wonder if you believe that the market share that you've had historically, which you show as 40% plus on the tree market, is what we should expect going forward? Or has the competitive landscape changed more from, let's say, the last 5 years? John T. Gremp: Right. Robin, no. We historically have had high-30s, low-40% market share as the market leader, and that is -- we believe that's sustainable because half of our inbound comes from our partners. So we don't see any change in our target of remaining the market leader with high-30s, low-40% market share. What you saw in the first quarter were 238 trees being awarded. Of the 238 trees, 140 of them were for pre-salt trees for Petrobras. You can't, if you look at a point -- and we didn't win any trees for Petrobras. That's because we had won the trees 1.5 years earlier with the first pre-salt award. So I think you're correct. And when we look at that market share, we need to look over multiple years because of the lumpiness in the industry. But let's go ahead and take the 140 trees out of the 238. And for FMC, without a major award, we had 25% to 30% market share. So that says that we're on track for holding our 30% to 40% market share going forward and that's our expectation. Robin E. Shoemaker - Citigroup Inc, Research Division: Okay, yes. So just related to that then, you mentioned there's some bigger projects coming up later in the year. And those will have some timing issues involved. The customer need to buy a certain date. And you know kind of how full your backlog is and how full your competitors are. I'm sure you have a good estimate of that. And so in terms of what's coming later this year in terms of big projects, do you think you're well positioned versus what your competition is able to execute and bid on in terms of some of these bigger projects that require a lot of take up of capacity? John T. Gremp: Well I don't want to comment on what our suppliers have done. They're prepared for the market growth, but I would -- let's just look at the facts. We had -- we are on pace to have 2 back-to-back growth years in subsea. If you just use trees as a proxy, we went for 3 years with an average of 300 trees awarded each year. Last year, it grew to 414, a 33% increase in tree awards. This year, we're on track to having the 20% to 30% growth. So anyone in the industry needed to be preparing for a back-to-back 2 years of 20% or 30% growth, which is substantial. Most of the suppliers, including ourselves, wouldn't have had that much capacity or demonstrated capacity available to handle that. What we've been doing for the last almost 3 years is preparing for that growth. And we've talked about that in earlier calls, whether it's the capital additions to expand our physical facilities which have been almost double what we spent in previous years. It was all designed to prepare us for these 2 back-to-back growth years in subsea. We've added substantial headcount because we believe the experienced technical resources, the industry's biggest constraint, and we've been aggressive in adding heads in 2011 and 2012, to some extent, to the detriment of our P&L as we brought this new talent onboard and began their training and development. So we feel very confident that we have prepared ourselves for these 2 extraordinary years of growth, and we'll be able therefore to hold our market share despite the rapid growth in the industry. The other suppliers, I can't speak to, but for someone to be successful in executing in this rapidly growing market over these last 2 years needed to be making the investments several years ago in order to execute at this higher level.

Our last question comes from Ryan Fitzgibbon from Global Hunter Securities. Ryan Fitzgibbon - Global Hunter Securities, LLC, Research Division: Maryann, can you comment as to what planned R&D spending is for 2013? Maryann T. Seaman: Yes. Actually, we haven't really provided an overall R&D spending number. When we talk about R&D spending, just to be clear, we use that in a broader term to talk about development costs, et cetera. So if you were to look at the R&D line, as we say, our development costs appear in other phases in projects. For example, they appear in period costs, et cetera. So the R&D line is not the only place where we incur costs associated with the advancement of our technologies. But we haven't provided a full year forecast for what we would consider R&D spending. Ryan Fitzgibbon - Global Hunter Securities, LLC, Research Division: Okay. And then the decision to accelerate that spending in Q1. Is it safe to assume that it's in advance of a project that you're expecting to win or what was the rationale for that? Maryann T. Seaman: Yes. So all of the technology, as John mentioned earlier, the technology that we need really to bid the 2 projects -- 15/06 was one of those projects that we -- that John spoke about, we have in-house. This is really for the development of next-generation technologies. So with the work that we talked about accelerating was really for future opportunities. We have what we need to the projects that we are currently bidding.

That's helpful. And then second question for me. In terms of Egina, I understand you can't disclose a whole lot, but is there any reason why it would not come in at the full 43 expectation that was outlined previously. John T. Gremp: You're right. We can't give that information. But in the West African National Oil Company project, they tend not to do call-offs or bids because they need the full approval from the government. So unlike the Gulf of Mexico, like Mad Dog, for example, where there's no national oil company, they'll call it off in bits as they need it. That's not the practice in West Africa because they want -- they put everything into the project and go to the national oil company and get approval at one time. Also the pattern has been that at least for the entire first phase, everything gets announced and awarded at one time.

I'll now turn the call back to Mr. Brad Alexander for closing remarks.

This concludes our first quarter conference call. A replay of our call will be available on our website beginning at approximately 2:00 p.m. Eastern Time today. We will conduct our second quarter 2013 conference call on July 24 at 9:00 a.m. Eastern time. If you have any further questions, please feel free to contact me. Thank you for joining us. John, you may end the call.

Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect.