Ladies and gentlemen, thank you for standing by, and welcome to the TechnipFMC Fourth Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Thank you. I would now like to hand the conference over to Matthew Seinsheimer. Please go ahead.

Good afternoon, and welcome to TechnipFMC's fourth quarter 2019 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 risk 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, 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. I will now turn the call over to Doug Pferdehirt, TechnipFMC's Chairman and Chief Executive Officer.

Thank you very much, Matt. Good morning and good afternoon. Thank you for participating in our fourth quarter earnings call. 2019 proved to be a year of significant quote for our company. We achieved an unprecedented level of inbound in the year equaling $22.7 billion representing order growth of nearly 60% versus the prior year. Our success was driven by an acceleration in the market adoption of our new subsea technologies, our integrated subsea model iEPCI, and continued strength in both LNG and downstream project sanctioning. In Subsea full year inbound of $8 billion grew more than 50% versus 2018. This was the highest annual growth rate for our company in over a decade and more than two times the industry's growth. This growth was driven by iEPCI with our award value more than doubling prior year levels and accounting for more than 40% of total inbound orders. iEPCI is no longer just an alternative commercial model. It has become the model of choice for most of our customers. In Onshore/Offshore, inbound orders grew almost 80% versus 2018 driven by more than $8 billion in LNG awards. This included the Arctic LNG 2 contract from Novatek, which builds upon the success of Yamal LNG. We were also a part of the winning consortium on ExxonMobil's Rovuma LNG Project, although we recorded limited inbound value ahead of the project FID expected this year. Total company backlog now stands at $24.3 billion, an increase of 67% from the same time last year. Backlog grew across all segments with Onshore/Offshore increasing almost 90% versus 2018. Importantly, over half of our total backlog is scheduled for execution beyond 2020 providing us with unrivaled visibility. Total company revenue in 2019 exceeded $13 billion benefiting from higher activity across all segments. Fully year Subsea revenue increased 14% in the year led by a 15% growth in Subsea Services and an increasing mix of integrated project activity. 2019 also marked the trough for segment revenue in Onshore/Offshore. We have seen the revenue inflection and have now experienced three consecutive quarters of sequential revenue growth. And when excluding Yamal LNG total segment revenue increased more than 25% versus 2018, demonstrating solid growth and diversity in the remaining businesses. And in Service Technologies, we experienced growth of more than 15% outside North America. Our international business now accounts for more than half of segment revenue. This strong growth more than offset the decline in North America with the total segment delivering a modest revenue increase. Now let me turn to our market outlook and segment guidance for the coming year. Starting with Subsea, we anticipate ongoing momentum in activity for small to midsized brown field projects and a continued healthy outlook for greenfield projects. Activity continues to be driven in part by emerging markets such as Mozambique and Guyana and strengthening activity in important markets such as Brazil and Africa. We also anticipate that Subsea Services will again experience double-digit revenue growth, driven in part by digital monitoring services, well intervention, and asset refurbishment activities. This strength in both project activity in Subsea Services provides the framework for 2020 Subsea orders to approach the level achieved in 2019. However, this remains dependent upon the timing of one or two major project awards. Turning to Subsea guidance, we see revenue in the range of $6.2 billion to $6.5 billion and adjusted EBITDA margin of at least 11%. In the first quarter we expect to see normal seasonal impact with margin improvement over the remainder of the year due to project timing and increased asset utilization. For Onshore/Offshore we remain confident that additional LNG projects will be sanctioned in the near to intermediate term. The outlook for long-term demand requires this additional capacity. And just this morning, Sempra Energy announced the selection of TechnipFMC as the EPC contractor for their Energía Costa Azul LNG project. We are very proud to have been chosen for this strategic development. Beyond LNG, we continue to selectively pursue refining, petrochemical, and biofuel project opportunities in Europe, the Middle East, Asia and North America, particularly where we can benefit from early engagement or leverage our process technology portfolio. For Onshore/Offshore guidance, we see revenue in a range of $7.5 billion to $7.8 billion and adjusted EBITDA margin of at least 10%, reflecting a lower contribution from Yamal LNG and an increasing contribution from projects in early stages. This guidance includes the impacts that we can estimate at this time for the coronavirus. In Surface Technologies we anticipate double-digit revenue growth outside of North America, driven by market activity and supported by our high tier products and technologies. This growth serves as a strong foundation to our outlook as our international franchise makes up more than 50% of total segment revenue. We anticipate North America activity to decline 10% versus 2019, which assumes an improvement in drilling and completions activity in the second half of the year. For Surface Technologies guidance, we expect revenue in a range of $1.4 billion to $1.6 billion and adjusted EBITDA margin of at least 12%. Maryann will cover all other guidance related topics later in this call. In addition to this tremendous commercial success in 2019, we have been taking actions to better position ourselves for 2020 and beyond. The announced separation of our company is a bold visible step in this regard, but only represents one aspect of the transformation that is taking place in our company. In Subsea, we are further optimizing our organization. To maintain market leadership, you need a combination of innovative technologies, fit for purpose assets, and global execution capabilities in order to deliver an integrated value chain. Part of our optimization efforts are focused on our assets, ensuring that we have the right assets with the right partners in the right geographies. And to achieve this, we will continue to right size and reallocate our assets to better align with the advantages of new technologies such as Subsea 2.0 and integrated project delivery. And we are also forming new strategic partnerships as demonstrated in our recent announcement with Allseas that can provide us with access to unique assets in a more capital efficient manner. These actions will lower our operating and capital costs and increase asset utilization and when coupled with the accelerating adoption of our next generation Subsea products and technologies that can help our customers reduce cost and cycle time for greater efficiency. In Surface Technologies, we will leverage the strength of our international franchise in order to capitalize on the growth we anticipate in the Middle East, Asia-Pacific, and the North Sea. In North America, we continue to transform our business by working with our customers to further drive well site operational efficiencies and lower greenhouse gas emissions. We are optimizing our services in operating geographies and when the economic returns don't make sense, we will look to exit rather than simply optimize to the status quo. And in Onshore/Offshore, which will very soon become Technip Energies, we are transitioning into a new growth cycle, one that is underpinned by the strength of more than $15 billion in project backlog. Our global teams have successfully executed complex projects in some of the most remote regions and we will continue to leverage this experience and intense focus on the work that lies ahead. And we will remain selective in our project choices, focusing on those prospects that offer the best opportunity for success for both our customers and TechnipFMC. As you can see we are taking actions across all of our businesses. Importantly, these initiatives are supportive of our strategy focused on market leadership and business transformation. 2019 was another transformational year for TechnipFMC. In August, we announced we would further reshape our future through the separation of our company into two industry-leading diversified pure plays. The spinoff remains on track for completion in the second quarter. As we have also shared, our new company Technip Energies plans to host a Capital Markets Day in Paris ahead of the transaction close. In 2019 we reinforced our position as the only fully integrated technology and services company. In Subsea we exceeded 100% growth in iEPCI inbound driven by the acceleration in the market adoption of our integrated model. iEPCI, which served as the catalyst for the merger, accounted for more than 40% of the total Subsea inbound orders in 2019, and has become the model of choice for most of our customers. When combined with double-digit growth in Subsea Services, we delivered full year Subsea inbound of $8 billion, an increase of more than 50% versus 2018. In Surface Technologies we grew more than 15% outside of North America when compared to the prior year with international revenues now accounting for more than half of the segment revenue. Our significant growth in backlog across all segments validates our strategy and provides us with confidence in our outlook. We continue to demonstrate our global leadership in Subsea, LNG, and the international Surface market. I will now turn the call over to Maryann to further discuss our financial results.

Thanks Doug. Total company revenue in the fourth quarter was $3.7 billion with adjusted EBITDA of $404 million. Fourth quarter cash flow from operations was $559 million. Adjusted EPS was $0.03 in the quarter when excluding after-tax charges and credits of $5.43 per diluted share. The total after-tax charges and credits largely reflect non-cash goodwill and asset impairment charges of $2.3 billion, which we disclosed earlier this month, and are detailed in our earnings release, evaluation allowance of $108 million impacting the tax provision, separation cost of $47 million, and a net restructuring credit of $1 million, which included a gain of $83 million in Subsea related to the consolidation of the PLSV joint venture. These charges reflect the specific actions we are taking to better position our company for 2020 and beyond as Doug outlined in his remarks. Included in our adjusted earnings are items for which we do not provide guidance, including an expense resulted from increased liability to joint venture partners of $0.22 per diluted share and foreign exchange losses of $0.13 per diluted share. The FX impact which is included in corporate expense was almost entirely driven by the significant devaluation of the Angolan Kwanzaa in the period. These two items impacted our adjusted EPS by $0.35 in the period and if excluded, our adjusted EPS would have been $0.38 per diluted share. And lastly, with regard to internal controls, we have fully remediated all previously disclosed material weaknesses. This will be reflected in our upcoming annual filings. Turning to the operational highlights in the quarter, Subsea delivered fourth quarter revenues of $1.5 billion, a 21% increase versus the prior year quarter. We experienced double-digit growth in both project and services activity in the period. iEPCI project activity continues to represent an increasing share of revenue, reflective of the well-established market trend towards integrated project development. The increase in services revenue was driven by higher installations, well intervention, and asset refurbishment activities. Subsequently, Subsea Services revenue was essentially unchanged despite the seasonal impact of weather. And adjusted EBITDA for Subsea was $185 million with a margin of 12.4%. Adjusted EBITDA improved modestly from the prior year as cost reduction activities and project completions offset the impact of the more competitively priced backlog. Onshore/Offshore reported fourth quarter revenue of $1.8 billion, an increase of 10% from the prior year quarter, primarily driven by higher activity. Adjusted EBITDA was $260 million with a margin of 14.2%. Operating results in the period benefited from the strength in execution across the portfolio. And finally in Surface Technologies revenue of $408 million was down 2% versus the prior year, whilst sequentially we saw modest improvement as we benefited from the strength in the international markets offset by the lower North American activity. Sequentially adjusted EBITDA margin of 13.7% increased to 150 basis points and reflects the benefit of a higher international mix of business and cost reduction activities. Turning to cash, we have now generated positive operating cash flow for six consecutive quarters. In the fourth quarter, we recorded $459 million of cash flow from operations some of which resulted from the timing differences between project milestones and vendor payments. Operating cash flow was $849 million for the full year. Beyond the operating line, capital expenditures were $86 million in the period. Our full year spend was $374 million when excluding the $80 million impact of the sale-leaseback transaction for the dive support vessel we recorded earlier in the year. We paid $58 million in shareholder dividends in the quarter and for the full year we made $233 million in total dividend payments. Additionally, we made a distribution of $119 million to the Yamal joint venture partners. We ended the year with $5.2 billion of cash on hand. Now I would like to provide additional details around our 2020 financial guidance. With regard to our revenue guidance, please note that the segments reflect the new business parameters as reflected in our separation announcement. Businesses with approximately $120 million of revenue in 2019, most of which came from Surface Technologies are now included in our Onshore/Offshore segment in 2020. Let me highlight the revenue coverage from backlog. In Subsea, at the midpoint of our guidance, approximately 71% of our anticipated 2020 revenue is expected from backlog scheduled for execution in the current year. We anticipate the remaining revenue, approximately $1.8 billion will be met by book in turn activity from both Subsea Services and projects. Subsea Services revenue is expected to exceed $1 billion in the year, only a modest amount of this revenue potentially is in backlog today, and most services orders quickly convert into revenue. In Onshore/Offshore, backlog supports approximately 86% of our expected revenue for 2020 at the midpoint. We anticipate approximately $400 million to $500 million in revenue from Yamal LNG. Turning to the remaining guidance items for 2020, we expect corporate expense net to be $180 million to $190 million for the full year when excluding the impact of foreign currency fluctuations. We expect net interest expense of $80 million to $90 million for the full year when excluding the impact of revaluation of partners' mandatorily redeemable financial liability. The increase from the prior year is largely the result of lower interest income associated with the company's cash balances. We forecast the full year tax rate in the range of 28% to 32%. Capital expenditures for 2020 should be no greater than $450 million and we expect cash flow from operating activities to exceed $1 billion with the back half of the year being a little stronger than the first half. In closing, Subsea revenue benefited from increased activity in both projects and services, while order growth reflected the acceleration in market adoption of our new Subsea Technologies and integrated Subsea model. Onshore/Offshore revenue has clearly inflected from the 2018 trough as evidenced by the achievement of our third quarter of sequential revenue growth, while in Surface Technologies we continue to leverage the strength of our international franchise. Lastly we generated nearly $850 million in operating cash flow in 2018 with positive results in all four quarters. Looking ahead, we begin 2020 with more than $24 billion of secured backlogs. We have strong revenue coverage for the year in both Subsea and Onshore/Offshore. We see revenue growth in all three segments at the midpoint of our revenue guidance range. As importantly, we are proactively taking actions across all our businesses in support of our focus on market leadership and continued business transformation, and in 2020 we expect operating cash flow to exceed $1 billion. Operator, you may now open up the call for questions.

Thank you. [Operator Instructions] Our first question comes from James Evans from Exane BNP Paribas. Your line is open.

Hi, good morning, good afternoon. Thank you for taking my questions. First one is actually on Surface obviously a decent Q4, the guidance pretty good, quite high restructuring charges, I just wondered if you could give us a little bit more detail there on what you're doing to drive improved performance as we head into next year and what deals from a size of the opportunity is? And secondly around just Subsea, I mean I think the guide for 2020 is maybe a little bit weaker than had been expected. I mean could you just clarify any reason for the deviation? And just actually an update on comments on the external environment, things like pricing, et cetera and also just the gap between margins on integrated awards and normal awards and when we see that benefit really coming through your business in the results you deliver? Thanks.

James, I will, I think that set the record for the most questions packed in a short period. Thank you very much. I think I captured four if not five there. What I'm going to do is, I'm going to walk us a little bit through the Subsea margin guidance, because I actually think that will in some ways address most of the other parts of your question and quite frankly maybe is the most prevalent and what is most new at this point. And if you don’t mind James, I'm going to take just a little bit of time on this and I think it is important that we kind of walk through the progression of this cycle and what ended up resulting in our 2020 guidance. So as you know, for TechnipFMC we had tremendous inbound order growth of more than 50% in 2019. And by the middle of the year, following the very robust orders of the first half, our integrated projects or iEPCI was representing more than 50% of the total Subsea orders. And at that time, I stated my confidence that 2019 would likely more to the margin trough at that time. However, I also noted that 2020 would be a transition year with the main obviously question for us being more about the progression of the margin improvement. If we go back to what we talked about a few times as an iEPCI company and the only integrated company, we have the benefit of being involved in the whole lifecycle, but that also means that the conversion of the inbound or the orders into revenue happens over a longer period of time. So again, we first have to design and build equipment and this takes 18 to 24 months before we can install and commission, which can take up to another 18 months, meaning that the orders from the first half of 2019 won't really drive margin improvement until late 2020 and beyond, as I had stated in earlier calls. I've also said the inception of the integrated business model that we will continue to prioritize our assets for these iEPCI projects and report our alliance partners. This was quite important, as it has been a very competitive period when bidding only day rate contracts on vessels. And while I was clear that this strategy would result in lower utilization during this period, we ultimately will benefit from a higher quality backlog driven by direct awards from both our alliance partners and those that we can convert [ph] from integrated feed to iEPCI projects. And we now have delivered on the first part of this strategy as evidenced by the strength of our 2019 inbound. Our Subsea guidance that was issued last night is also consistent with this message. And while it is still possible that 2019 was the absolute margin trough, the significant ramp in activity we are experiencing not only impacts our company directly, but also our suppliers and the supply chain in general. The elasticity of the supply base is not proven to be as robust as that of our own company. Therefore we are experiencing incremental cost to strengthen our supply chain. These efforts are well underway. As these transitory costs come down, and as we move further into the offshore campaigns, we remain confident in our ability to achieve or exceed our stated guidance, driven in part by the higher utilization of all of our assets. It is important to emphasize our strategy and outlook remains unchanged and we are confident we will deliver double-digit revenue growth in 2020 and we will remain confident that we will deliver margin expansion over the coming years. With that, I'll pass it to Maryann to talk a little bit about the restructuring charges that we have announced today.

Sure. James, thanks. I think your first question was referencing the restructuring charges in North America. As you've probably seen, we've recorded about $37 million directly attributable to Surface. You heard Doug say we're taking a very focused approach and ensuring that we are exiting businesses and product lines where we are not meeting the profitability there. So that charge that we recorded in the quarter represents the exit of certain product lines and certain headcount reductions. And as you can imagine, that is largely North America related, so that we see performance improvement deliver the margin improvement and the success that we are focused on for 2020. So that's what you're seeing being recorded in the third quarter, again largely attributed to North America.

I appreciate the answers, and I think I probably [indiscernible] so I won't ask a follow up. Thank you.

Your next question comes from Angie Sedita from Goldman Sachs. Your line is open.

Thanks. Good morning, guys.

Good morning, Angie.

Good morning. So I appreciate the detail on the Subsea margin Doug, that was really very helpful, but maybe if we could ask a little bit more on that. On the comments you said, strengthen your supply chain, which is obviously very fair, is that the occurrence that we'll see only are predominantly in the first half and the second half we could see a larger ramp with both the awards you saw in 2019 and the elimination of those additional costs? Maybe talked us through 2020 and going into 2021 on that margin ramp?

Sure, Angie. So maybe and an analogy I could use is, we came out of the gate really, really strong. And again, our growth in 2019, we doubled the industry growth, so okay, that could be translated into obviously an expansion in our market share. And all of that combined at the same time has to be translated through this - has to trickle through the supply chain if you will. We've been working with the supply chain. We've resolved most of the matters. We're very well advanced. I don't want to leave any doubt. And I appreciate the follow up question that the matters are well under control. I'm just pointing to the fact of going back to six - almost nine months ago now, and the comments about the 2019 being the trough in the margin and where we came out with the guidance, which was I think just a small rounding here below that was really just to emphasize and put a little bit of color around what's actually happening. So to your question, yes we see – we will have the normal seasonal activity decrease in activity in the first quarter. There is no way around that. That just has to do with certain geographies at which there's very little Subsea activity because of the sea conditions in the first quarter. But we would expect to see a ramp then through the end of the year and an exit rate that would be more reflective of the type of margins that we will be able to generate from this much high quality and high level of inbound that we had in the first half of 2019.

Okay, thank you, very helpful. And then I mean, if you have any color on the exit rate, feel free to share, but then I would also ask on Subsea orders and the outlook for - I mean, obviously, you've had a very impressive year in 2019 on iEPCI and if you could talk about the opportunities for iEPCI in 2020, as far as total and as a percentage of inbound orders? And then you made the remark of course that Subsea orders could approach 2019 levels, but is dependent upon one or two major awards and maybe if you could give us some further color there?

Sure, in terms of the iEPCI, the way I look at it Angie is, it is kind of - it's just our way of doing business going forward. We, so I think that we've somewhat established that and I believe even the rest of the industry is now acknowledging that which I guess is somewhat flattering. Where we go in 2020 versus 2019? I see no reason why the percentage of iEPCI would not be at a similar greater level than it was in 2019. Again, we have a very healthy portfolio of integrated feed studies. It's important to remember that our ability when we convert those integrated feed studies to integrated iEPCI projects, these become direct awards to our company. We also have an expanding list of exclusive iEPCI alliances. We added two more in 2019 with two additional customers, meaning 100% of their integrated work is coming - or 100% of their Subsea work is coming to us through our new integrated model. So with that, I would expect over time, as we've clearly demonstrated in just two years from zero to close to 50% of our business being integrated, you know a trend that is very likely to continue, not just for us, but eventually for the rest of the industry as well. So, you know, I think that continues to look quite strong. In terms of the absolute order level, always hard to tell, hard to state at this point in the year, and you know we don't give absolute guidance on order intake. It's very difficult given the size of our projects and the difficulty to time them within a particular 12-month period. But what we do show is an opportunity set over the next 24 months. We publish that. We update that regularly. It remains robust. But I remind you that a large percentage of our awards don't show on that list. That is the projects that are, let's say, publicly available to us into our competition or some of our competition that would qualify to do that work. We have that exclusive set of proprietary opportunities, again, from our alliance partners, or from the iEPCI integrated feed studies, excuse me, that can turn into direct award iEPCIs if we reach a certain project economic threshold that benefits both the client as well as ourselves, typically driven by an accelerated time to first oil. When we look at it, and that's the reason I made the comment, I did, yes 2019 was a very robust year. Some things obviously we would have to continue to have a very strong year and we would have to have some things go right in 2020, to be able to match that level of order inbound. We had some billion dollar plus awards in 2018 and in 2019. We may not see those billion plus awards in 2020, although we do have a portfolio of large opportunities, that if they all came together and the timing all happen, by the 31st of December of 2020, we could be in a very similar range as we are going forward from 2020 versus 2019.

Great, thanks. I'll turn it over.

Your next question comes from Lillian Starke from Morgan Stanley. Your line is open.

Hi, good morning. I just wanted to, if you could provide a bit of color on the operating capital guidance? And I recognize some of that may be partly driven by cash advances that you might expect from clients, but I was just wondering if there's also any underlying improvement that you're seeing on your own working capital dynamics? And then the second question I had is on the back of what we're seeing on the coronavirus, is there anything - I know you are working with certain Chinese yards, is there any delays or any concerns at this point in time?

Okay, sure. So, thank you, Lillian. I'm going to make a comment around the coronavirus and then I'm going to pass it to Catherine MacGregor, who's with me, and as you know, is the CEO-elect for Technip Energies and has been very involved and is currently the President of the GBU for Onshore/Offshore and is very involved in those projects. So I'll let her add some additional color. And then Maryann will add some additional color around the cash flow comment that you made, which I appreciate you pointing it out. We're very proud of the progress that we've made, to continue progress that we've made, and a good progression, and I'll just remind you that we are a business of projects and there will always be new projects coming in and projects closing out. And we are very pleased with the trend of our cash flow and the projections that we were able to share for 2020. Just in terms of the coronavirus, look first and foremost we are deeply concerned for those who have been impacted. We are very much monitoring the situation and have put in place the appropriate actions to try to ensure the health and wellbeing of all of the 37,000 women and men of our company, and the many, many more contractors that we work with in the various sites and the various projects around the world. I'll let Catherine again put some additional color around these, so maybe an example or two of what's actually happening on the projects.

Yes, thank you. And indeed, we are in light of the context of the coronavirus working very actively, and I would say collaboratively as well with our customers, but also with our subcontractors and with our partners to make sure that we take appropriate measures to really mitigate the impact on our project. So what we said is that the guidance that we gave you on Onshore/Offshore reflects what we see today as the impact of the coronavirus. So to give you a little bit of example of some of the things we're doing, again working very collaboratively with our customers and with our suppliers in one of our projects. For example, we were able to transfer some engineering hours from one of our Chinese based subcontractors to one of our operating center. In other projects, some orders were placed or were diverted from a Chinese supplier to a European based supplier. And we have a number of actions like these that we are able to take, again working as productively as possible with our partners, suppliers and customers.

Lillian hi, Maryann here, and maybe just a little more color around the cash flows and again, thanks for your question. I think you know and certainly given the backlog that we have and the significant project component, our objective is certainly to be cash flow positive or at minimum cash flow neutral against the entire portfolio. So I think what you see happening as we continue to execute along that backlog is that continued improvement and certainly working capital is a piece of that.

Okay, perfect. Thank you very much for the color.

Your next question comes from Sean Meakim from JP Morgan. Your line is open.

Thanks, good afternoon.

Good morning, Sean.

So, maybe to follow up on the cash flow guidance, on a traditional basis you implied more than $500 million of free cash flow sounds very positive. Can you maybe just put some parameters around the influence of prepayments on LNG awards, so a little more granularity with respect to working capital and then just how you see the impacts of cash from financing with the MRL in 2020 on cash?

Sure Sean. So again, I pass to Maryann to provide the more detailed answer, but I just think it's important that we – you know we are a projects business. We will always have new projects coming in and advanced payments, as you well pointed out from those, but we also gave 2020 cash flow guidance. So I think what you'll be able to see very clearly is the continued improving trend, that is also reflected in our guidance. Maryann?

Sure, Sean. And maybe a little more color around the MRL. I think as you asked there, and you know, you can actually see it when we produce the 10-K, but our MRL today sits at about $300 million. So at a minimum, assuming no other further changes on the project, that outflow will happen to the partners at the time at which both TechnipFMC and its partners decide for that payment to happen. So that happens in the financing section as you well noted, but that outflow will happen. I think the second part of your question again, was around working capital, and we certainly won't try to get as granular there. But as you know, a big piece of the changes in 2019 were and as we talked about that, the big outflows that we saw from Yamal as we continue to progress toward completion of that project, I think you can expect that the outflows from Yamal will be much less than 2020 than they were in 2019.

Okay, that's very fair, thank you for that. And then, Doug's comments were interesting when he mentioned the supply chain not proven to have the elasticity of your company and that's led to some incremental costs that are perhaps transitory. Does any of that carry into the CapEx budget for 2020? I was hoping we could maybe get a little more granularity of that $450 million that you're planning for this year.

Thanks, Sean. No, not directly from the supply chain considerations. The capital budget, which you'll see reflected in the capital budget is those incremental commitments we may – that are part of particularly the large Subsea projects. So when it's a Greenfield project, and we are providing the full iEPCI, including the life of field contract, which we call iLOF or integrated life of field contract, most of those come with a certain level of capital expenditure in order to support a 15, 20, 25, even 30-year life of field Subsea contract. And if you think about it this way, that's kind of the tooling and the assets that are required to go out if there's any need to be able to recover for inspection, for repair, for monitoring services associated with those Subsea installations.

Got it, very interesting, okay. Thank you.

Your next question comes from Bertrand Hodée from Kepler Cheuvreux. Your line is open. Bertrand Hodée: Hello, everyone. Two questions if I may, one on Subsea margin. Thank you, Doug for providing a kind of the main moving part, but can you quantify what is the impact of those supply chain incremental costs you're seeing for 2020? And also, can you give us some guidelines around the utilization rate of the vessels you expect for 2020? And then I will have a follow-up question on the coronavirus?

Okay, sure. Thank you, Bertrand. So let me cover the first one, which was to quantify the impact of the supply chain. Look, I think it's again I want to make sure it's very well understood. It's well under control. We took these orders in the first half of 2019. We started placing the orders with the supply chain during the first half of the year. We have a complete understanding. This isn't a new discovery. We have a complete understanding of what's happening and we took that into account and reflected that in our guidance. So hard to quantify the exact impact, but I guess you can tell by the guidance level that we provide, you know, it's not a huge number and it's well under control, which is why we were able to provide the guidance and the confidence that we have in the guidance for 2020 of at least 11%. In terms of the guidelines around utilization, again, we don't really see utilization improving much until the second half, and really not until 2021/2022. And that's when we'll see a meaningful impact in the overall improvement of the utilization of the fleet tied to those iEPCI awards. Bertrand Hodée: Okay, thank you, and then the follow up question on the on the coronavirus. So, if I understood well, your guidance in Onshore/Offshore already includes some of the impact that you can estimate at this time for the coronavirus. Can you help us understand what was this impact that you've currently included, is it potentially in terms of revenues being deferred or in terms of margins?

Yes, because obviously, we are not quite ready to give you a number, because what we've done is that, we looked at the project portfolio and on the aggregate estimated the impact on some of the internal milestones that we could see moving and made a judgment to give you the revenue guidance in 2020 to really integrate all of these impacts. So, we won't give you and we don't have really a breakdown at this stage and I think you've summarized it very well, that our current view of our revenue, the guidance we gave you integrate the impact that we see today of the virus. Bertrand Hodée: Okay, fair enough. Thank you.

You are welcome.

Your next question comes from Vaibhav Vaishnav from Scotiabank. Your line is open.

Hey, guys, good morning. I guess I was trying to expand on Sean's question. So can you help us think about the $450 million of CapEx, what are the bigger buckets you mentioned, life of projects, but if you can expand more on that and boats and what are the other – typical bigger buckets?

Sure, I'll provide you some additional color. So there's a certain level of maintenance CapEx associated with the existing asset base, both the manufacturing assets as well as the fleet. The increment and the only increment that you're really seeing is tied to that tremendous inbound growth that we pointed out in 2019 and the continued investment to support the growth rate of our Subsea services business, which as I pointed out, grew substantially in 2019 and we expect it to repeat in 2020.

Okay, and I guess, you have talked about owning boats as being not essential for the Subsea business. Can you talk about what are your latest thoughts if there are any - if there are ways or if you have any thoughts around divesting that piece of the business?

Well, I think the whole industry needs to restructure and really get focused on driving through cycle returns, not just peak returns. And in order to do that, we have to look at the capital structure of our industry and we have to look at the capital structure of our individual companies. As in many other attributes, particularly in the Subsea business, we believe that we are leading by example. So you know, we took some very decisive move. We announced some asset sales during the last year and we will continue – and we announced a very important partnership as well with Allseas and we will continue to look at ways that we can work collaboratively with anyone at all in order to ensure success for the industry going forward, and once again make it a very attractive place for the investment community to put their money, because of the type of margins that we'll be able to demonstrate on a through cycle basis. If we keep looking at it individually as to the own size of our assets, regardless of what type of assets they are, we tend to end up in a situation where the industry is over capitalized, and we don't generate the type of returns that are required. So, we are very open to working with anybody and we have demonstrated that, and we will benefit from that in terms of the type of returns that we'll be able to generate because of that type of behavior.

Thank you.

Your next question comes from Mark Wilson from Jefferies. Your line is open.

Hi, good morning, Doug and Maryann. I'd like to ask about an update on the Brazil riser and I think that the situation flagged by Petrobras, can you just give us an update there Doug and Technip's involvement in it?

Sure. So, the issue as we know is there's a phenomenon called stress corrosion cracking. It happens when a few conditions are met. Those conditions are very prevalent in the presalt reservoirs and the presalt composition of the hydrocarbons that are produced. And therefore, we see an accelerated rate of stress corrosion cracking in that environment. Why am I emphasizing that? This is a well-known physical phenomenon. It happens anywhere where there is steel placed in a certain condition, where this type of event can occur. By the way, a standing structure, a bridge if you will, made out of steel is experiencing stress corrosion cracking, it's not, you know, it's absolutely well-known and understood. When the presalt was developed, because of the high Co2 content, and the fact that a flexible riser if the when the annulus is flooded can accelerate that phenomenon. So it's a well-known phenomenon, it just becomes accelerated. So look, the industry – this is an industry phenomenon. We are obviously the leader in the flexible pipe, both technology and certainly in the install base and continue to be. So we've been working very actively actually with industry, but and very much directly with Petrobras and making sure that we could clearly understand the phenomenon in this condition, and then be able to model it, so that we could predict the - let's say the impact of the effects of the stress corrosion cracking, whilst at the same time and in parallel, developing solutions that will be less, will be more resistant or even stress corrosion cracking, SCC if you will, stress corrosion cracking free. And that's exactly the process - and that's what we're doing. So it's multi-dimensional as I am pointing out. We are well advanced on the first element, which is now being able to model and predict and working very closely with Petrobras on that. So it's very - it's a combined issue and it's now a well understood issue and we're able to model it. At the same time, we're developing the solutions hand in hand with Petrobras, and we're very pleased, and they are - more importantly, they are very pleased with the progress that we're making. We just had a review on the subject matter two weeks ago with the Petrobras leadership team, and we'll continue to work with them in an open and collaborative way to solve this phenomenon and ensure that we will have a product that they'll be able to use across their portfolio, because it's important to understand what we're really talking about is a small application of flexible pipe. If you look at the total amount of flexible pipes sold, this is a very small portion of that total market that is impacted. It's not all of Brazil. It's not all of Petrobras. It is not all of presalt. It's in a very specific, isolated situation. That being said, we're committed to solving it, as I pointed out, and are making good progress in that situation. In regards to the rest of the business around our flexible product line, it continues unchanged if you will, and continues to be quite robust.

Excellent, thank you very much Doug. And then one short follow up, Maryann, just in 4Q cash build was about $400 million of additional contract liabilities came in the working capital, I just wondered if you could give a split between Subsea and Onshore/Offshore for that?

So the cash flow change in the quarter as you pointed out is largely driven by the change in contract liabilities. And as you know, we try not to be so segments specific, it gets to a level of granularity. But if you think about some of the major moves in the projects, and you can think about how they might be as we're progressing through in the early stages, both Doug and Catherine have talked about that, it might be helpful. But certainly milestone payments, as I mentioned, we try to stay ahead of that cash flow curve. And that indicates obviously, we've got we don't - we've got work to complete. You can think about the size of some of the major projects that we've announced recently and that might help in the thinking about the separation between what is Subsea and Onshore/Offshore.

Okay, thank you. I'll turn it over.

Your next question comes from Amy Wong from UBS. Your line is open.

Hi, good afternoon. A couple of questions from me, please. The first one is just a reference to your tremendous success on winning integrated SPS and SURF projects. The industry seems to have embraced the solution and yourself and another big competitor seems to be mopping up a lot of the market share. So can you talk about what other competitors are doing or reacting to this seeming increasing take up of integrated solutions and how they're trying to compete with you on that front? And then my second question is bigger picture, just – can you talk more in general about your technology leadership in Subsea? You touched on your flexible 2.0 program, but also want to understand and some other emerging technologies like 20K play, how important will this technology be for you to sort of maintain or even start to win more market share as the tendering pipeline progresses? Thanks.

Thanks, Amy. And look, I'll be brief on the first one, on the - what is the competition doing around iEPCI? I am sure they're talking about it. I'm sure they're trying to figure that out right now. It's not evident to me what they're doing. But what is clearly evident is, this the way that the market is going. We're real thankful that in 2016 we had the vision. We're even more thankful that in 2017 we completed the transaction, and obviously most thankful for the recognition by our clients in the amount of over $7 billion of integrated awards that they've given us thus far. The vast majority of those being direct awarded to our company, so we're just very thankful for the situation we're in. In regards to technology leadership in Subsea, it's obviously an important - it's one of the important elements. The commercial model has been usually successful. But the ability be able to merge that with a technology program that not only drives the expansion of the Subsea market in an example like 20K that you pointed out, which is very important indeed. It also can be fundamentally changed the way that we conduct our business or our operating model, both in terms of our physical footprint, as well as in terms of our assets. So Subsea 2.0 has had a profound impact on our manufacturing footprint in a positive way, if you will, from a cost point of view or from a returns point of view and I strongly believe that Subsea 3.0 and beyond will have the same type of impact on the installation capabilities going forward for ourselves and ultimately for the industry.

All right, that's very interesting. Thank you very much.

Thank you. And we only have time for one more question. Our last question comes from Kurt Hallead from RBC. Your line is open.

Good morning or afternoon and thank you very much for fitting me in here. I appreciate that. So Doug, I just wanted to maybe follow up real quick to make sure I understand correctly how you were going through that very detailed explanation of the transition year of 2020 and the impact on the Subsea margins related to that transition of much significant backlog flowing through the system. So would it be safe to say that maybe at a baseline of the margin that you have in backlog that would be maybe 100 basis points higher than that minimum point of guidance that you've provided, and therefore the difference is all that incremental costs that are incurring through the supply chain to make sure you can execute on these projects, is that a fair way to maybe look at that?

Certainly a creative way to put me in the corner, Kurt. I'm not going to fundamentally disagree with your statement.

Okay, that's fair enough. And then on the - just the last one here on Surface Tech, when the split does occur, that will be roughly 20%, looks like 20% of the Technip FTI EBITDA. I found interesting your commentary about the North American market where you thought the second half would be stronger than the first half. That seems to be running a little bit countered. There is some other commentary that we've been picking up throughout the earnings period. So I just want to get your perspective on how you see that evolving and just want to try to calibrate that with other things we've been hearing?

Yes Kurt, look I'm not going to pretend that I have a crystal ball that others don't on the North American market and doing it for too long. I don't think anybody's ever gotten it right over a 12-month period. It's just way too dynamic of a market. Most of our competitors are now only giving H1 guidance. And yes, we could have went that route as well. We put out the view that we understand from our perspective, understanding kind of our market position and what we're trying to do in the market. But I think like everybody else we'll see how the first half develops and we'll come out with updated guidance for the second half when it's more appropriate.

Okay, and I think just to finish off on here, you've indicated that there's an opportunity to take the integrated model from Subsea into Surface, just want to get an update from you on how that may be progressing?

So thank you very much, it's a great note to end on. It is going well, and we’ll be talking a lot more about that at the TechnipFMC Analyst Day later this year.

Right, thank you.

And if I could operator, I've never done this before, but I'm going to ask a question because I'm a little bit surprised, we didn't get a question around. We just announced an LNG award as part of my prepared remarks. The award came just maybe one hour before this call. That is a huge, huge element for our company and for Technip Energies going forward. So Catherine, could you tell us a little more about the award that Doug announced earlier today?

Now this is a setup. Thank you, Doug for your question. I’ll just say a couple of words to say that, in general, we are still extremely positive about the LNG outlook for future demand, additional infrastructure will be needed. Additionally, our own positioning within the LNG market is very strong and not to come across as overly confident, but there are only a few credible players that can tackle these complex LNG projects. And so today, the announcement from Sempra Energy of this award is really coming as a great satisfaction. We are very, very pleased with this award. It’s the result of very early engagement with our customer’s recognition of our global LNG track record, also experience in Mexico, which we had before. So we are very, very pleased and looking forward to deliver on this project. So thanks for the question.

And I would like to turn the call back over to Matthew Seinsheimer for closing remarks.

Thank you. This concludes our fourth quarter conference call. The replay of the call will be available on our website beginning at approximately 8 p.m. Greenwich Mean Time today. If you have any further questions, please feel free to contact the Investor Relation’s team. Thanks for joining us. Operator, you may now end the call.

Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.