And we have, again, that combination of iEPCI and 2.0, and just the open and collaborative way we work with our clients really fits those clients — our existing clients, but also the new clients on a very favorable way. So, I guess that really –- what gets us excited is it’s the quality. And we obviously have the opportunity to be selective given the market position that we have. So, we can really focus on those high-end, high-quality inbound that will create the success for the years to come.
David Anderson: So on another subject we’re starting to hear something about is rising breakeven costs for offshore. We know rig rates have more than doubled over the past few years, service costs are moving higher. Just wondering, in your conversations with customers, do you get any sense from customers that they’re concerned about that? Is that potentially driving a sense of urgency for your customers to get a project locked up before costs move higher? And just related to that question, what’s the percentage of an overall project, what percentage do you guys typically comprise? I know they’re all different, but maybe just a range would be helpful.
Doug Pferdehirt: I’m sorry, the second part, what percentage of?
David Anderson: Yes, of your business sort of comprises one of these offshore projects. Just curious, is it 20%, is it 30%? Just trying to get a better handle on where you sit in the scheme of things.
Doug Pferdehirt: Sure, thank you, Dave. So, let me do the second part first because I think it’ll help feed into the first part. In a brownfield development, so that’s into development where there is an existing host facility and you’re tying back maybe an extended part of the reservoir or a new reservoir back to that host facility. We now — because of being the only fully integrated company, we now can represent up to 70% of the cost, Dave, of a brownfield development, normally between 60% and 70%. So, if you will, we are the cost driver. Now, I’m going to get off of this cost part here in the second, but we do comprise a large portion of the value of that project. In terms of a greenfield development, the rule of thumb is about a third, a third, and a third.
That’s where the driller has a third, we would have a third, and then whoever is building the floating facility would do the other third. So, a little less influence over the overall project economics in a greenfield development, but it still can be quite material, and here’s why. And this now bridges to the first part of your question. It’s all about time. It’s simply all about time. So, yes, I understand rig companies like to talk about day rates, but the reality of the project economics is the best way to influence the overall project returns is to accelerate the time to first oil. And most importantly, deliver the project on time. And this is what’s driving our customers’ behavior, Dave, because they’re sitting there and they want to align with the very best companies that give them the highest probability of delivering the project on schedule.
And oh, by the way, with TechnipFMC, we can typically deliver it one year ahead of — if we don’t use TechnipFMC, again iEPCI, 2.0 driving that cost or that cycle time to be much shorter. So, that’s really what we’re seeing. We’re seeing a flight to quality. Sure, they’re always focused on economics and always have been, and so are we. Again, as a pure play, we truly understand the value of the offshore, and we truly understand how to drive offshore project economics to an ever higher level, and we do that through our iEPCI, the 2.0, unique offerings through our company, which gives us our customers the confidence in our ability to be able to continue to deliver these projects on time, that that’s really the secret sauce of our company, Dave.
David Anderson: Great, thanks a lot, Doug. Appreciate it.
Operator: Luke Lemoine at Piper Sandler, your line is open.
Luke Lemoine: Hey, good morning, Doug.
Doug Pferdehirt: Morning, Luke.
Luke Lemoine: When you laid out that initial Subsea margin target of 15% for ’25, in late-’21, which you actually just hit this quarter, I don’t believe there is much ’25 backlog basically at the time. Just guessing this is somewhat predicated on what you saw coming in the pipeline from 2.0, iEPCI, direct awards, which you’ve talked about. Since then, you’ve raised that margin target earlier this year. But my question is, even though you have some backlog visibility past ’25, which you show in your slide deck, how comfortable are you with where margins get ahead for maybe the next three to four years? And just to clarify, not looking for a specific margin target, just your confidence and visibility in that three to four-year timeframe?
Doug Pferdehirt: No problem, Luke. You’re spot on. If you go back to November of 2021, it was a very different world. And when you look at what was happening offshore, it was very different indeed. So, we were talking about, at that point, increasing our margins up to 15%, but largely through the internal initiatives, and that’s really — Subsea 2.0 has allowed us to change our operating model from an engineered-to-order to a configured-to-order operating model. That has had profound impact on our business. And you can’t just do –- first you have to develop the architecture, but then you have to gain enough scale to be able to really see the benefits of the configure-to-order. So, if you will, it’s a unique opportunity for our company.
So, when we gave the 15%, largely predicated on internal initiatives, clearly the market conditions have improved since 2021, hence raising the 15% to 18%. Thank you for pointing out we tripped the 15% already this quarter. And we continue to be extremely confident in the progression of our ability to continue to extend the margins, not only because we’re getting evermore benefit from the configure-to-order model, as the iEPCI and 2.0 direct awards continues to increase for our company, and we get the volume and the scale benefit as well. And, obviously, the underlying market conditions are improving for us, gives us to confidence to be, and it’s why we repeatedly said the 18% is a major milestone on a more ambitious journey. So, we remain extremely positive of the future.
Luke Lemoine: All right, got it. Thanks so much, Doug.
Operator: Marc Bianchi at TD Cowen, your line is open.
Marc Bianchi: Hi, thank you. Maybe just quickly, Alf, to confirm on the EBITDA for this year, you said $915 million not $950 million, correct?
Alf Melin: Yes, Marc, confirm, 915 is what I said, and it’s $35 million up from the prior guide that we had from the prior quarter.
Marc Bianchi: Yes, okay, super. Thank you.
Alf Melin: And, Marc, if I — can I ask something, Marc, just to clarify also. You may wonder, in the prior quarter, if you remember, we mentioned also that we think we will be doing EBITDA –- having a 35% growth of EBITDA into 2024. So, now that you take this new number of 915, you can still apply this 35%. So, just to be very clear, we haven’t backed off on the 35% going into 2024, but I am happy that you clarified 950 versus 915, but still the same dynamics are in place.
Marc Bianchi: Okay, that’s great. That was actually going to be my next question. Doug, if I remember correctly, you came to FTI in the early 2010s, which was a period when I think everybody thought that subsea was kind of going to grow as far as the eye can see. And it seems like maybe that’s where we are shaping up today, but the market is quite a bit different. Your offering is obviously very different. But from a customer perspective, I’d be curious to hear any reflections on how things compare today versus that early 2010 period?
