Scott Gruber: Great. I appreciate the color, Doug. Thank you.
Operator: Saurabh Pant with Bank of America, your line is open.
Saurabh Pant: Hi, good morning, Doug.
Doug Pferdehirt: Good morning.
Saurabh Pant: Doug, a quick follow-up on the flexibles question earlier on, it’s really good to see the traction third quarter. Can you talk to us a little bit about the demand outlook for flexibles, and maybe talk to your capacity, the industry’s capacity to deliver on that demand? And the reason I’m asking that, Doug, for some context is because one of your large competitors has talked about being sold out through 2025, so I’m just trying to think how’s the demand looking, how’s the capacity looking, particularly at FTI?
Doug Pferdehirt: Yes, just like in every part of our business, we don’t focus so much on being sold out, we focus on developing technology that we can ensure a shorter delivery time, or faster deliveries, or higher throughput, if you will. So, if we look at Subsea 2.0 broadly, Subsea 2.0 reduces the time through our facility by 50%, or in other words, we can put twice the capacity through our existing facility without spending additional capital. When you’re still doing engineer-to-order, or 1.0, which as you point out, the rest of the industry is doing, including in flexibles, you’re kind of constrained by the size of your facility, and hence being sold out or percent utilized. What we’re doing now is expanding the 2.0 offering — the 2.0 methodology across our entire offering, including flexibles.
So, our approach is how can we have a better product that’s configured-to-order versus engineer-to-order, that we can have a higher cadence through our manufacturing facilities, thus addressing the market’s needs. The other aspect I would point out is clearly we’re focusing on our partners, our direct awards, our iEPCI projects, because again, as I pointed out earlier, that’s really the secret ingredient to success of an iEPCI or an integrated project. So, we do some prioritization, which is why when I was answering one of your colleagues earlier, I said we do do some prioritization, and we do tend to work on the high-end, high-quality, if you will, portion of the flexibles market. There is a lower end portion of the flexibles market as well, which we certainly can participate in, but that’s not where we focus, that’s more of the commoditized end of the flexibles market.
Saurabh Pant: Okay, awesome, Doug, thank you for that. And just a quick follow-up, because we get this question a lot from investors, so let me just ask you the way I get asked. Two of your competitors recently formed a joint venture. How should we think about the potential impact of that joint venture on the overall market, the industry’s capability to respond to what’s going on, and how does it impact FTI in particular, how should investors think about that?
Doug Pferdehirt: So, just to clarify, you’re talking about the three subsea?
Saurabh Pant: Yes, I’m talking about, yes, the OneSubsea joint venture?
Doug Pferdehirt: I’m sorry, I meant the three subsea companies that are coming together…
Saurabh Pant: Yes, absolutely.
Doug Pferdehirt: Well, look, I think, first and foremost, it’s clear validation of the strength of the market. Three subsea companies wouldn’t be coming together if they didn’t see the strength in the market going forward. So, it’s just a point of validation. But it’s also a reshaping of the market, right? So, we see both of these things as quite favorable to our company. We’ve talked a lot about bringing companies together, consolidation is one thing. Creating an integrated offering, we feel is the better way to go about it, investing in technology, doing things that are going to improve our clients’ project returns, that’s where they see the value. And that’s, quite frankly, why we’ve seen and continue to see the level of direct awards to our company, which is quite unprecedented in our industry, or I believe any industry.
So, look, from our point of view, we did our heavy lifting back in 2015, believe it not that long ago is when we started the journey. We completed the merger on January 17, 2017. And look, I’ll be very candid, it took years. It took years to get everything operating at the level it’s operating at today. Bringing together two companies, let alone three companies, it’s not easy to do. So, we’re really glad we did ours eight years ago, I can tell you that. And today, we’re singularly focused on our clients, and singularly focused on their success by delivering the world’s very best subsea projects.
Saurabh Pant: Right, no, that’s good. Okay, thank you. I’ll turn it back.
Operator: Our last question will come from the line of Waqar Syed at ATB Capital Markets. Your line is open.
Waqar Syed: Thank you for taking my question. First one, Doug, you’ve given guidance that, over the next five quarters, inbound orders in Subsea could be around $11 billion. If you look back over the last three to four months, has that view been upgraded or has that view relatively remained unchanged but the confidence in that outlook has increased?
Doug Pferdehirt: A fair question, I would say it’s been upgraded, and the confidence has increased.
Waqar Syed: Okay. Now, does that have any impact then on your 2025 outlook for revenues and EBITDA?
Doug Pferdehirt: Absolutely not.
Waqar Syed: Okay. And then —
Doug Pferdehirt: Well, let me clarify. Maybe that was too quick of an answer. When you talk about the $25 billion target for 2025, clearly, as indicated in my script, we expect we will be giving you an update on that on the Q4 guidance. So, if you were staying on inbound, as you mentioned, EBITDA. Again, as I said earlier, we’re going to be giving — we just gave a view for total company EBITDA for 2024, which is an increase again this quarter, the second consecutive quarter that we’re increasing our 2024 number, which obviously shows a very strong pattern. We’ll be segmenting that out on the fourth quarter call. And may take the opportunity to revisit 2025 as well, but clearly it’s trending in the right direction.
Waqar Syed: Okay. And then in terms of your capital spending, $250 million or so for this year, is that number likely to change? I know it’s still early for next year or is that kind of base level $250 million that’s likely to stay year-over-year?
Doug Pferdehirt: The truth is we don’t know. And I know it’s an important number because I know it’s a visible number for investors to use in their decision-making. What I would encourage people to realize is it’s really the prioritization of that spend. And it’s clearly being prioritized to upstream, and it’s clearly being prioritized to offshore. So, from our perspective, we are very confident in the continued growth of the capital expenditure. And I’m going to let Alf to add some additional color.
Alf Melin: I just want to add the reminder that — so, when you look at our capital expenditure, we have given the long-term guidance that we are going to be in a range of 3.5% to 4.5%. However, over the past 12 months and more, we have really seen that we can operate at that 3.5%, the lower end of that range, and that continues to be the guidance, meaning 3.5% of revenue level. It’s true for this year, it’s probably going to be true for next year. And just keep that number for right now as a guide for the intermediate term.
Doug Pferdehirt: No, thank you, Alf. I was answering it — just to be clear, I was answering it from our customers’ capital expenditure. And thank you for clarifying the interim, Alf, I appreciate it.
Waqar Syed: Thank you very much, appreciate the answers.
Operator: I will now turn the call back over to Matt Seinsheimer for parting remarks.
Matt Seinsheimer: Thank you. This concludes our third quarter conference call. A replay of the call will be available on our Web site beginning at approximately 8:00 p.m. British Summer Time today. If you have any further questions, please feel free to contact the Investor Relations team. Thank you for joining us. Jack, you may now end the call.
Operator: This concludes today’s conference. We thank you for your participation. You may now disconnect.
