Thank you for holding, and welcome everyone to the TechnipFMC Third Quarter 2023 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. [Operator Instructions] Thank you. I will now turn the call over to Matt Seinsheimer, Senior Vice President, Investor Relations and Corporate Development. Mr. Seinsheimer, please go ahead.

Thank you, Jack. Good morning and good afternoon, and welcome to TechnipFMC's third quarter 2023 earnings conference call. Our news release and financial statements issued earlier today can be found on our Web site. 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. Non-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. 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 Chair and Chief Executive Officer.

Thank you, Matt. Good morning and good afternoon. Thank you for participating in today's earnings call. We delivered solid results in the third quarter. Subsea inbound orders came in strong, at $1.8 billion, and adjusted EBITDA improved sequentially for both Subsea and Surface Technologies, exceeding the guidance we provided on our second quarter call. This momentum is also driving our expectations for full-year results higher. Continuing with total company financial highlights in the quarter, revenue was $2.1 billion, adjusted EBITDA $284 million, with an adjusted EBITDA margin of 13.8% when excluding foreign exchange impacts. Total company inbound was $2.1 billion, total company backlog ended the period at $13.2 billion. In Subsea, we received significant orders for flexible pipe in the period. These included an award from Petrobras for the pre-salt fields in Brazil and our largest-ever flexibles contract in the Gulf of Mexico for Woodside's Trion project. As both pioneer and market leader of this technology, flexible pipe provides us with the unique capability to design fully integrated end-to-end subsea systems for our clients. We have the unique ability to integrate flexible technology into our iEPCI offering, which greatly simplifies field architecture. This enables a further reduction in project cycle time, improving economics, and driving greater differentiation in our integrated offering. Beyond flexibles activity, we also experienced an exceptionally high level of unannounced project awards in the quarter, which speaks to the ongoing strength of the market. In Subsea Services, inbound was robust, driven by installation and life of field activities. Given the continued strength in our inbound, we are confident that subsea orders will exceed $9 billion for the full-year. And if we extend the view to include our current expectations for 2024, we now believe the next five quarters will approach $11 billion. With this near-term update, we…

Thanks, Doug. Inbound in the quarter was $2.1 billion, of which $1.8 billion came from Subsea. Revenue in the quarter totaled $2.1 billion. EBITDA was $284 million when excluding foreign exchange loss of $46 million, and impairment, restructuring, and other charges totaling $4 million. Operationally, we delivered solid results. In Subsea, revenue was $1.7 billion, up 6% from the second quarter. The increase was driven by mid single-digit revenue growth in both projects and services. The largest drivers of the improvement were in the Norway and Brazil. Adjusted EBITDA was $258 million, with a margin of 15.1%, up 70 basis points from the second quarter. Results benefited primarily from higher volume and favorable activity mix. In Surface Technologies, revenue was $349 million. This was a modest decline versus the second quarter, primarily driven by lower revenue in North America, which decreased 8% sequentially, partially offset by higher international activity. Adjusted EBITDA was $50 million, a 6% sequential increase. International results benefited from improved operational performance in the Middle East. North America results were largely unchanged versus the prior quarter despite the revenue decline benefiting, in part, from strategic actions taken in prior quarters. Adjusted EBITDA margin was 14.3%, up 100 basis points versus the second quarter. Turning to corporate and other items in the period, corporate expense was $24 million when excluding less than $1 million of charges. Net interest expense was $27 million, and tax expense was $19 million. And lastly, we incurred a foreign exchange loss of $46 million in the quarter. Approximately 50% of the loss was directly related to actions taken that we believe will reduce the volatility in our foreign exchange exposure going forward. Importantly, we believe these were one-time elements of our results in the period. Approximately 30% of the FX loss was related…

Certainly. [Operator Instructions] David Anderson at Barclays, your line is open.

Great, thanks. Good morning, Doug. How are you?

Very well, David. And yourself?

I'm doing great. So, a question on -- may be just to start on the order outlook. So, there, over the next five quarters, you see $11 billion. What looks different about that $11 billion going forward or does anything look different in terms of is the customer mix shifting one way or another? I think you said 70% you're expecting to be Subsea 2.0. With market capacity tightening, I would think pricing should also be firming up as well. Could you maybe just talk about the difference going forward with what you pulled in over the last year or so?

Sure, Dave. I guess at the highest level, the way I would describe it is it's just a much higher quality inbound. And there are several aspects to that, but most importantly for our company is the direct awards, which is now over 70% of our business being direct-awarded to us in subsea. That's being driven by our unique iEPCI or integrated offering, our unique subsea architecture, the Subsea 2.0, and again our very long, strong client relationships. There's also a bit of a mix shift in terms of the customer base. I talked about that for a few quarters now. We continue to see the customer base expanding and more people moving into the offshore arena because of the high-quality reserves and, quite frankly, the access to those reserves. 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.

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.

I'm sorry, the second part, what percentage of?

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.

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.

Great, thanks a lot, Doug. Appreciate it.

Luke Lemoine at Piper Sandler, your line is open.

Hey, good morning, Doug.

Morning, Luke.

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?

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.

All right, got it. Thanks so much, Doug.

Marc Bianchi at TD Cowen, your line is open.

Hi, thank you. Maybe just quickly, Alf, to confirm on the EBITDA for this year, you said $915 million not $950 million, correct?

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.

Yes, okay, super. Thank you.

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.

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?

Interesting question, and actually I think a lot about this just in my spare time. So, look, a lot changed. And when we talk about the customers, I would say our customers are much more collaborative, much more open to partner-led solutions, much more open to new technologies. And it's really what enabled us to be able to achieve the success we've achieved with Subsea 2.0. The idea of standardization has been around since before 2010. The ability to be able to go from engineer to order to configure to order, which is much more than just standardization, was really the key when we unlocked that and were able to convince our customers that they could still have, if you will optionality. But the building blocks were going to be standardized, not the final, the final product, but the input to the final product was going to be standardized, that really changed the way of thinking. So, look, a lot of the credit goes to our customers. And their behaviors, which have certainly changed and improved over the period of time, our customer base has also expanded quite significantly over that period of time, that I mentioned in the script, we're operating in twice the number of basins that we have historically operated in, so people don't really think about it that much, but just the offshore market. When we think about offshore as offshore, but it was fairly limited in the areas of offshore that were really being developed, and that has doubled. And then, when you start to look in the, what keeps this momentum going, you start to look at all these frontier basins that we're hearing about. They're not onshore, they're offshore. And they're offshore around the world. They're not in any one particular continent or one particular area. They're spread around the world. And those areas are the ones that are going to contribute well beyond the numbers that we're talking about today. So, it is very, very different. And thank you for pointing out, I do want to close on, we're a different company, we were a great company in 2010. I believe we're an even greater company today. And again, that's driven by the change in our operating model and our ability to be able to demonstrate to our clients and give them the confidence to direct toward us the work that they do, because of who we are.

Great, thank you very much.

Mark Wilson at Jefferies, your line is open.

Thank you. Yes, excellent set of results and an outlook there. Doug, just a few outside points and the sale of the Apache vessel, I'm just wondering if there's any more of those planned. And then, the other question, do you see on the horizon a first offshore CCS award coming at all? Those are my two points?

Thanks, Mark. Regarding the fleet, as we have said, since we formed the company, on the 17th of January 2017, we're going to focus on a company that really had exemplary through cycle returns. And part of that was we were going to do things differently in regards to the fleet. We do not need to own and operate all of the vessels that we use in our business. The only way to do that is to be a company that others trust, and others are willing to work with. And that's our reputation. And that's how we've been able to develop our vessel ecosystem and bring in world-class partners like Allseas and Saipem, and more in the future. And that's really what enables us to continue to look at our fleet and determine if those assets are strategic to our company or not. And if they're not, then we're able to continue to streamline our -- improve our returns by streamlining our fixed cost base.

Okay, very clear.

I'm sorry, Mark, and I just was reminded of your second question. I got excited about the first. Thank you. On the second question, I would answer that by saying indeed.

Kurt Hallead at The Benchmark Company, your line is open.

Hi, good morning everybody. Hello?

Good morning, Kurt.

Great. Well, making sure you know what, I didn't lose you. Hey, Doug, with the expanding inbound and backlog you have on Subsea and obviously the increased visibility out toward the end of the decade. I was wondering to give us some insights on what -- how you're managing execution risk internally and what you are able to provide to your client base that assures them that when they do throw this stuff your way, you're going to be in a very strong position to handle it. And as you said, deliver it on time.

Kurt, that's the million dollar question. And I will tell you when I'm speaking to clients, that is typically when they call me, that is typically the call, it's -- we have this new opportunity, we're looking at this new emerging basin, we want to be securing assets well into the future we want to work with TechnipFMC, give me or give us the confidence that you're going to be able to deliver this, that is absolutely the discussion that's going on today. First and foremost, do what you say you're going to do. And we've demonstrated that. We continue to shorten the cycle times; we continue to deliver the innovation into the industry. And we continue to be the company that our clients want to partner with, that they want to work with because of our behaviors, and who we are as a company. More importantly, as to give them the additional confidence, I should say, is really helping them understand how this shift from engineer to order to configure to order has fundamentally changed the operating model of our company. And we actually had an opportunity earlier this week with our Board of Directors to kind of walk them through how we're operating the company today at on a daily basis and an operating level. And it's a profound change, and the visibility and the -- our ability to be to continue to be able to see though and understand what are those key success factors that will ultimately deliver the KPIs or if you will, the project on time. And tracking those key success factors is a really quite a fundamental change. And I know it sounds basic. But when you're doing configure to order, the only really metric you have -- I'm sorry, when you're doing…

That's great color. And a follow-up, kind of curious, right, we've seen some recent, kind of tying everything together here, right? With respect to the order book, the upcoming, the insights, as to the projects that are slated for even later this decade, and the incremental oil that's going to bring to the market right, yet. So, pack them out and suggest continued oil demand growth out beyond 2030. Obviously, that the IEA kind of picks a different tone, but through all your experience in dealing with different cycles, right? At the end of the day, I can't imagine the customer moving forward with a project that's going to deliver first oil latter part of the decade, if their data is telling them that the markets not going to be there for the product. But that's kind of curious as to when try to piece all this stuff together. How do you sort through the noise?

Kurt, I think you look for the high quality data, you look for -- you listen to your clients, and you look for the most realistic outcome that's not influenced by external factors. And I think it's very, very clear that there's going to be a continued demand and a continued high level of demand. And just using the references that you use at the beginning, we certainly believe in the data and the commentary that's being provided by OPEC.

Appreciate it, Doug. Thank you.

Arun Jayaram at J.P. Morgan, your line is open.

Good morning, Doug. I wanted to get some thoughts on the flexibles business at FTI. I was wondering if you give us a sense of how much of your kind of current contribution is from flexibles and as we think about a couple of the large project awards that you announced this quarter with Petrobras and with Woodside and Gulf of Mexico, how that mix could change and maybe the margin profile as well as maybe just the technology that you think you bring to the table versus two of your other peers that are in that segment?

Sure, Arun, as you pointed out, there's very few of us who work in this domain. We're the pioneer, we're the market leader. I would say we focus more on the higher end range of the flexibles. We've always gone, we're the ones who have driven diameter, we're the ones who have driven pressure rating, we're the ones who have driven tensile strength, et cetera. And as far as percentage of the business, it's important, but more so than the percentage of the business that it represents. And it depends if you prefer bayou base or gumbo, but anybody who has a bayou base or gumbo recipe has a secret ingredient. This is our secret ingredient. This is what makes iEPCI tasteful. And the reality of the situation is, without this, you can only do limited -- there's only limited benefit to an integrated offering. This is why, as the first mover, we chose to go with Technip at the time. The flexible offering from Coflexip was absolutely critical to our vision of an optimized subsea architecture. So, it's not only the value it brings as a product line, but we're the only ones who have the product within an integrated company. The real benefit we get is the influence it has on our iEPCI awards and also on our iEPCI margins.

Okay. That's helpful. Maybe just a follow-up for Alf, you mentioned how the soft guide on 2024 is 35% EBITDA growth from the 915. I wanted to maybe ask for a little bit of a clarification on the cash return. I believe the stated policy is to return 60% of your free cash flow back. And one of the questions from investors is, how does the PNF settlement, how does that impact the free cash flow calculation and cash return?

No. Thank you for the questions. So, first of all, very clear, we do have a commitment out there that we will return at least 60% of our free cash flow to shareholders. And we're going to stay true to that over the next few years. So, what we further are saying is that really also the growth rate of 35% that you see in EBITDA from 2023 to 2024, we expect to apply that to distributions as well for 2024. So, in short, answering your question, yes, there is an impact of roughly $170 million of payments outflow next year in terms of the free cash flow. But overall, we still expect to increase shareholder distributions by 35% in line with our EBITDA guidance. So, that also tells you something about the underlying strong fundamental cash flow that you're going to see year-over-year, if you exclude the impact of these $170 million of payments.

That's helpful. Thank you.

Scott Gruber at Citigroup, your line is open.

Yes, good morning. Doug, in your prepared remarks, I believe you mentioned upside to service revenue in addition to the upside to order intake. You guys have been targeting 1.5 billion of service inbound and in '25. I'm just curious, whether you guys are contemplating upside to that number as well.

Thanks, Scott. Obviously, we'll be giving a bit more detail with our Q4 on our Q4 call, but I would tell you, as you were kind enough to ask the question, we are very proud of our subsea services business. We have high expectations of our subsea business, so you should expect to see our subsea services business continue to benefit not only from the higher level project awards, which means a higher level of installation activity, but we're also seeing customers focus more on inspection, maintenance, and repair, really wanting to ensure optimized uptime of their producing assets, as well as our subsea well intervention services. And that's really about ensuring the production, because there may be some downhole issue that has occurred, and our ability then to go out and help them intervene into the well in the most cost-effective way. So, there's multiple drivers and a significant amount of optimism around our Subsea services business.

Got it. And the margins for that business have typically been better, what's the outlook for pricing and margins going forward then? I just imagine that there's more competition between installation and the maintenance and inspection, just given that the equipment award volume is going up and therefore the installation outlook is going up, does that create competition for those resources to do the inspection, maintenance, repair, such that you can get incremental pricing and margins?

Well, first of all, Scott, remember this is an OEM model, so we service and maintain everything that we install. We have the world's largest install base, and we benefit from that with these businesses. It's only growing as based upon the award activity over the last couple of years where we've had a substantial growth relative to the market that has been reflected in subsequent years into our subsea services business. But it's all an OEM business. Look, I don't talk a lot about pricing. We work very closely with our clients. They want to ensure that we're getting -- that we are very satisfied with, that we feel we're being treated appropriately and fairly on an economic basis, and we're very comfortable with that, yes.

Great. I appreciate the color, Doug. Thank you.

Saurabh Pant with Bank of America, your line is open.

Hi, good morning, Doug.

Good morning.

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?

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.

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?

So, just to clarify, you're talking about the three subsea?

Yes, I'm talking about, yes, the OneSubsea joint venture?

I'm sorry, I meant the three subsea companies that are coming together…

Yes, absolutely.

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.

Right, no, that's good. Okay, thank you. I'll turn it back.

Our last question will come from the line of Waqar Syed at ATB Capital Markets. Your line is open.

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?

A fair question, I would say it's been upgraded, and the confidence has increased.

Okay. Now, does that have any impact then on your 2025 outlook for revenues and EBITDA?

Absolutely not.

Okay. And then --

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.

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?

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.

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.

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.

Thank you very much, appreciate the answers.

I will now turn the call back over to Matt Seinsheimer for parting remarks.

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.

This concludes today's conference. We thank you for your participation. You may now disconnect.