Gaztransport & Technigaz S.A.

Good afternoon. This is the conference operator. Welcome and thank you for joining the GTT Third Quarter 2024 Activity Update Conference Call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Anyone who wishes to ask a question may press star and 1 on their touch-tone telephone. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Jean-Baptiste Chouamé, CEO of GCT. Please go ahead, sir.

Thank you. Good evening, everyone. Thank you for joining us this Friday afternoon for our Q3 activity update. I am pleased to have Thierry Ochoa, our CFO, here with me today. Without further delay, let's dive into the key highlights. So let's start with the key figures on the right part of the slide. In the third quarter, we maintained strong order momentum, bringing the total to 68 new LNG careers orders since the start of the year. We also secured 12 ETHAN carriers, including 8 ultra-large ETHAN carriers, or ULEC, which will be the largest ETHAN carriers in the world. I will provide more details on these later in the presentation. Finally, we received an order for 12 LNG-powered container vessels, which will feature our one-bar gauge tank design. we also received an order for one bunker vessel. For the first nine months, revenues stand at €465 million, marking a 55% increase compared to last year. Thierry will dive deeper into the numbers shortly. As for our guidance, I am pleased to report that, in the absence of any significant delays at the shipyards, and thanks to improved feasibility for year-end, we are now expecting to reach the top of the ranges for revenue and EBITDA. Now turning to the other key highlights. In services, we have partnered with Nikiso to equip tail LNG-fueled container ships with GTT's recycled reliquefaction system. In smart shipping, Assens Marocca solution has been selected to equip GazOcean's entire LNG carrier fleet. As you know, innovation is in our DNA. This quarter, We received several approvals in principle, including one for our three-tank 200,000 cubic meters concept. I will provide more details on this later. Lastly, GTD Strategic Ventures has made an investment in Bluefins to support the development of more sustainable naval propulsion technologies. This marks the fourth investment from our fund since the beginning of 2024. Now moving to our order book. With a total of 82 orders in our core business and 43 deliveries to date, our order book stands at an all-time high. It's worth noting that ETH and careers represent a significant portion of the orders for the first nine months. Now, moving to the next slide, which you are all familiar with, our estimate of the LNG careers required for the liquefaction facilities currently under construction. To transport the additional 175 million tons per annum that these projects currently under construction will add to the LNG market by 2029, approximately 285 LNG carriers will be needed. Following Q3 orders, around 200 ships have already been secured, leaving up to 85 more ships required in the near future. Now, let's touch on shipyard capacity. The energy careers market is demand-driven, and we've observed that shipyards have been increasing their available slots to meet ship owners' needs. Back in 2020, we estimated the capacity to be around 55 slots compared to approximately 70 slots today. We anticipate this rising to around 85 slots by early 2026, mainly due to the ramping up of Chinese shipyards. We believe that the number of slots could keep rising. An additional benefit of this increased capacity is the potential expansion of the replacement market, as any available slots could be used for this purpose. One factor that would limit shipyard capacity is if the supply chain fails to keep pace. We remain vigilant about ensuring the quality and capacity of our approved suppliers to deliver the essential components for membrane systems. On LNG as a fuel, we have observed that the market is gaining momentum. As mentioned earlier, We received 13 orders in Q3, and we are seeing early methanol adopters shifting back to LNG as their fuel of choice. However, as we have shared in previous quarters, the limited availability of shipyard slots poses a challenge for membrane technology, while Type B and Type C tanks are being aggressively promoted. We continue to innovate, as demonstrated by the recent Juan Bargoge tank design pressure order. This innovation will allow LNG-powered ships equipped with GTT's membrane technology to comply with upcoming regulations requiring cold ironing in poles. As I mentioned earlier, innovation is deeply embedded in GTT's DNA. Our 200,000 cubic meter three tank concept stems from the need to reduce CO2 emissions in line with upcoming regulations. By optimizing the ship's average speed, emissions can be reduced by approximately 20%. The increased capacity of 200,000 cubic meters compared to today's standard of 174,000 cubic meters allows charterers to maintain the same shipping intensity, transporting equivalent volumes of LNG per year. This performance is made possible by larger capacity and an innovative three-tank design versus the standard four-tank design, which improves the boil of freight due to a more favorable surface-to-volume ratio. Continuing with innovation, as I mentioned at the start of the presentation, we've received eight orders of what will be the world's largest E10 careers. After pioneering the VLEC, the very large E10 careers, we are once again leading the way with the ULEC, the ultra-large E10 careers. These carriers with a capacity of 150,000 cubic meters are made possible by GTT's Mark III membrane technology, which enables a lighter overall ship weight. This results in a design draft allowing the ship access to most ports. I will now hand over to Thierry, who will share more about GTT Strategic Ventures and provide further details on the financials. Thierry, the floor is yours. Thank you, Jean-Baptiste. Good evening, everyone. So, let me go over GTT Strategic Ventures. As you know, GTT Strategic Ventures is our investment vehicle to take minority stakes in innovative startups that have the potential to contribute to the group's strategic roadmap of building a sustainable world. Our latest investment is in Bluefins, a French company founded in 2021. They have developed a technology inspired by the tail fins of whales, which converts vertical pitching motion into forward propulsion. This solution is designed to optimize energy efficiency, reducing both fuel consumption and harmful emissions. Additionally, it improves vessel stability, contributing to safer navigation. With Bluefins, we are making our fourth investment this year by our fund and the seventh since its launch in 2022. Now, page 11, now regarding our financials for the first nine months of 2024. Revenues at 4075 million euros are up plus 55%, a very strong increase compared to 300 million euros for the first nine months of 2023. Four drivers to explain our strong revenue performance. The first driver is revenue from UBIS, standing at 429 million euros, was up plus 57%, benefiting from a higher number of LNG cars under construction. The second one is revenues of LNG as fuel are up plus 22%, benefiting from the numerous orders received in 2021 and 2022. The third one, is electrolyzers revenue through our Elogen affiliate are slightly down at minus 1% and standards at 60.6 million euros for the first nine months of 2024. Finally, we observed very good momentum in services. at 29 million euros, up plus 40% compared to the last year, thanks to services to vessels in operations, including the digital services, and also thanks to good level of pre-engine studies. I will now hand back to Jean-Baptiste for the conclusion on our guidance. Thank you Thierry. As mentioned at the beginning of the presentation, In the absence of any significant delays at the shipyards and with improved visibility for the year-end, we are now expecting to reach the top of the ranges for revenue and EBITDA. Regarding the dividend payments, we remain committed to our pledge of distributing at least 80% of consolidated net income to our shareholders. That concludes our presentation. Thierry and I are now ready to take your questions.

This is the conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. Anyone who has a question may press star and one at this time. The first question is from Richard Dawson of Birnberg. Please go ahead.