Gaztransport&Tecnigaz Adr

Good morning. This is the conference call operator. Welcome and thank you for joining the GTT third quarter 2025 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 one on their touch-tone telephones. 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. Philippe Bertheautier, Chairman of the Board and CEO of GTT. Please go ahead, sir.

Good morning, everybody. I'm very pleased to present to you the Q3 2025 Activity Update. I am with Thierry Ochoa, the CFO of the GTT Group and with the entire investment relation team. Well, your 20-25 first nine months have been quite impressive. First of all, the fundamentals are excellent with 84 million tonnes per annum already decided. The revenue are approaching 600 million euros on the first nine months, which represents an increase of 29% compared to last year. We obtained fairly diverse orders with energy carriers, FN Energy, Energy as a Food. All that led us to upgrade our 2025 outlook when we include Danelec. On key highlights, we introduced a new technology for energy as a fuel that we named Cubic. We obtained approval in principle from Bureau Veritas. We completed the acquisition of Danelec, and we obtained a quite large contract from the Chinese shipyard for 24 energy carriers. We continue our innovation efforts with the new partnership with Bloom Energy and Pono Exploration Group on a new system for zero-emission ships. And we obtained a contractor for an electrolyzer in Slovakia for one megawatt. If we look at our order book, we've received orders, 19 orders in the first six, nine months. So not taking into account the order we received in October. So 267 energy carriers, which are guaranteeing our activity in the next years, 22 18 carriers, three FNG and three CSIU. If we look at the market, we can see that the activity in terms of FCA, sales and purchase agreement for energy, for the contract path to decretion facilities, have been very important in the second and third quarter of 2025. And that is very much supporting the decisions for future FIDs. In fact, in terms of FIDs, we can see that this year has been phenomenal. It's an all-time record with 84 million tons decided as of today's. It's historic, and that means that the outlook for energy demand for the next year is very strong. So it's the supportive trends for energy and for energy are very strong, but the geopolitical context remains quite complex. I would say we could talk about that at large, but I would say that the instability of regulations between the two sides of the Pacific Ocean are creating a kind of concern still perplexing the decisions of shipowners. I do hope that the recent discussions are going to be able to clarify that. In any case, the energy carrier order inflow is expected to increase backed by a strong long-term fundamentals on which we talked just a moment ago. As far as energy as a fuel is concerned, we can see that the adoption of this fuel structure is continuing to grow very significantly. It's very good news, very good news for the planet, very good news for GTT, as this energy at a certain point of time is going to be transported by energy carriers, and also very good news for energy as an actor in energy as a fuel. We can see our market share. We are trying to enlarge this market share in introducing new solutions. And we've introduced Cubic, which is a new tank design, which aims at enlarging, increasing the cargo space, the space left for the cargo. facilitating the installation, so reducing the cost of building the tank, reducing the boilers, and so improving the total cost of return of our solution for the owners. In our digital activity, we are scaling up our efforts in the 1.25 billion market with the acquisition of Denelec that we've completed at the end of July. We are in a fast-growing market, and we do expect to be able to benefit from this growth. We are, in this market, our mission is to benefit from recurring revenues, which will balance our other activities, and to develop revenue synergies that we are targeting between 25 to 30 million euros by 2030. So key achievements, well, I would say that during these first nine months, we've released a new generation of VDR. Well, that shows you that the innovation activity, constant innovation activity of Danelec is very much in phase with what we do at GTT. And it's why the integration is going to be very easy as we are on the same wavelength. We've obtained new contracts with a very significant contract obtained from for 24 energy carriers with our slushing system developed for mitigating the slushing risks and optimizing cargo operations. Now, I hand the mic to Thierry Ochoa, the group CFO, who is going to present to you the consolidated revenues.

Thank you, Philippe. Good morning, everyone. Now, regarding our revenues for the first nine months of 2025, revenues at the 600 million euros are up plus 29% strong increase compared 40 or 65 million euros for the first nine months of 2024. Two main drivers to explain our working performance. The first driver is revenue from new builds standing at 558 million euros plus 30% benefiting from a higher number of LNG and HN carriers under construction. The second driver is linked to the digital activities at 20 million euros plus 83% and including 6.5 million euros of revenues of Danelec, our recent acquisition. Excluding Danelec, the digital revenue growth was plus 24% compared to last year. One comment on revenues from LNG as fuel. They are down by 32% at 16 million euros, and mainly explained by the strong competition. Regarding electrolysis activities, revenue are down and stands at 3.7 million euros for the first nine months of 2025, compared to 6.6 million euros for the first nine months of 2024. This evolution is mainly due to the absence of a contract in 2024 and the continuation of transition and repositioning of LOGEL. Finally, revenues from services slightly decreased by 3% at 18 million use due to a lower level of pre-engineering studies which are non-recurring by nature, but offset by robust certification activities. All in all, the activity of the first nine months of 2035 remains very solid. I now back to Philippe for the outlook.

Yes, thank you Thierry. Well, on the back of a very strong core business performance and integration of Danelec over a five-month period, we are upgrading our outlook, assuming no significant delays in ship construction schedules. For reviews, instead of range between 750 million to 800 million euros, We have now an estimated range of 790 million to 820 million euros. For EBITDA, instead of a range between 490 to 540 million euros, we have a range now between 530 to 550 million euros. And our payout ratio will be at least 80% of our consolidated net income. So now we are going to answer to your questions. So please.

Thank you. 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 The first question is from Richard Dawson of Barenburg. Please go ahead.

Hi, good morning and thank you for taking my questions. First one is just on the order outlook for new LNG carrier orders, because clearly very supportive trends with new LNG capacity being sanctioned this year. But we're still seeing a bit of hesitation from ship owners really to place those orders with shipyards. So just through your conversations with your customers, when do you expect an acceleration to start to come for those LNG carrier orders? And then maybe second question is just on shipyard capacity across Korea and China. Has this slowdown in LNG carrier orders this year put some of that planned expansion on hold? Where are we sort of in total slots for this year? Thank you.

Okay. Well, thank you all very much for this question. I do agree with you about these hesitations. It's a perfect word for characterizing the current situation. In fact, the owners are whether they should take the decision now. They are very much perplexed due to the instability in regulations. We had taxes on Chinese-built ships in the U.S. We don't have them anymore. We have taxes in China. on ships, American ships. So they would like a more stable environment before taking decisions. Energy carriers are the most expensive commercial ships, and that's important investment decisions. So they are weighing the risk. before taking these decisions. I can say that we have a lot of discussions with ship owners. They would like to move. They would like to know whether they can go to China. They would like to know what kind of competition they can benefit from between China and Korea. So that's considerations that for the time being they are working. So when is it going to change? I think we may have orders in the last two months of this year. And I think that year 2026 will be significant in terms of ordering. And it goes back to the second part of your question about slots. I don't think that there are many slots still available for building ships in shipyards for delivery in 2028. And so then it's in 2029. And I'm feeling that these slots are fairly far away for the needs that owners have. So there is going to be a kind of acceleration in the market. And your last question is the capacity Well, the current flow of others is not reducing the capacity of the yards as they are building. So the capacity out there as they are very, these capacity are very active. And it's important for the shipyards to maintain these capacities. And it's why we can see some, some pricing, some prices which are more aggressive than what they used to be. And I think it's a factor which is going to help the acceleration in the order flow I was speaking about.

That's clear. Thank you very much.

The next question is from Jean-Luc Romain of CIC Market Solutions. Please go ahead.

Good morning. I have two questions, please. The first is about LNG as a fuel orders. We have seen several ship owners like CMA, CGM, and I think Evergreen in Taiwan ordering dual fuel vessels recently in Korea and China, not sure. Should it translate into orders for you as the first question? Second question is as we are seeing a slowdown in order this year in new LNG carriers, should we expect a slowdown on stabilization of your new build phase in the next couple of years or should we expect those to decline a little? I'm speaking about the new build phase.

For energy as a fuel, one, we have not announced a contract. I cannot comment on the fact that the contract is going to be false. It's a market where we have a market share, where we are trying to enlarge our market share, and where we are improving our offering, our solutions. in order to do so. So it's a market with high competition where we are fighting hard. On the slowdown of orders and the consequences it means for the years to come, well, I would say that we are giving you figures about our reviews for the next coming years, and I send you to your computations, to your work, for assuming what the turnover is going to be, what the results are going to be. for the next year. I cannot further help you. We are giving you all the information about that. I can say that we are not seeing any kind of cancellations in our order book. nor we see particularly delays in delivery.

Thank you very much.

As a reminder, if you wish to register for a question, please press star and 1 on your telephone. The next question is from Henri Patricot of UBS. Please go ahead.

Yes, good morning everyone. Thank you for the update. Two questions from my side, please. The first one on the market. I was wondering if you can comment on what you see as the potential impact of the delay to the IMO net zero framework, both for the core business in maybe driving a slower replacement of the fleet, and secondly, in terms of the speed of adoption for LNG as fuel. And then secondly, on deliveries, For this year, I believe you targeted something close to 100 deliveries in the core business. Is that still the case? It implies quite an uptick in the fourth quarter. Thank you.

Well, on the market for my MO, I think I hinted that, you know, last year. communication at the end of July for the first six months of the year, I was feeling that it was going too far too quickly. And the delay in the implementation of this regulation is not going to change the fundamental trend of the market. for shipping, which is that shipping is switching to energy. Energy is reducing the CO2 emissions and energy is cheaper than other fuels. So cleaner and cheaper, it's two significant improvements. And whatever, in spite of the delay of the IMO regulation implementation, there will be, this evolution will continue. It's not going to cause a kind of slowdown in the energy carrier decisions as that is very much driven by the need for ships for new plants and also for replacement market. And there is clearly a need for replacing all ships which are generating twice more CO2 than modern ships. And there are large parts of the world, to begin with Europe, which are taxing CO2 emissions, heavily taxing CO2 emissions. So all these points are in place. and are positive for energy at launch and positive for energy as a fuel. On your second question, we expect to to have still a strong activity in 2025 with compared to 2024 we had 66 orders. And up to now, we had in 20, 25, 58 orders. And we are going to have still significant 28, sorry, 58 deliveries. And, of course, we are going to have still Aegean in the future. fourth quarter of this year, a very significant number of deliveries.

That's it. Thank you.

The next question is from Jamie Franklin of Jefferies. Please go ahead.

Hi there. Thank you for taking my questions. So firstly, just on LNG carriers, at the 1Q25 update, you spoke to around 40 to 65 vessels still required for projects under construction. I just wanted to get a sense of how many of the orders that you received in the last six months are for those under construction projects and how many are for, you know, the newly FID projects this year, please. And then second question just on Danilek. So the integration seems to be going well. Are you still actively pursuing new M&A opportunities now or are you waiting for the integration of Danalec to complete? And then if you are considering new opportunities, could we assume similar size to Danalec? Thank you.

Okay. On LNG carriers, I have not noticed when we said 40 to 65, but it's a time ago, but definitely the orders we received this year are for existing projects and so are decreasing this number of projects decided before year 2025. And we have not received orders for the 84 million tons per annum decided in 2025. These are for deliveries in 2029, 2026. So it's these long-term perspectives which are going to be supported by these investment decisions. And still, we consider that there are shapes which are needed for the projects decided before 2025. On M&A and Danelec, yes, I confirm that the integration with Danelec is going well. The priority for the time being is to continue very well this integration. It's the best guarantee that we are going to be able to obtain the synergies that we were talking about, and also that we are going to be able to benefit from the growth of the sectors where we are operating. We are looking at M&A possibilities, of course. We are not becoming blind to what we could find on the market. But I would say that for the time being, there is no opportunities which are making sense. But it's not because there is nothing that we are not looking at that. And it's not because we have a priority succeeding the integration that we are not looking at what could make sense, which is our priority in Andorran. Next question.

The next question is from Kevin Roger of Kepler-Chevreux. Please go ahead.

Yes, good morning. Sorry for that one, but it's a kind of follow-up because you used to give us the net numbers in terms of how many vessels you were seeing for the project that were sanctioned or under construction. So just if you can follow up as a kind of magnitude, the 84 million tons of projects that have been sanctioned year to date in 25, How many vessels do you consider are needed to transport this LNG worldwide? Just a kind of magnitude with the data that you were provided before. And the second one, on Helogen, it seems that the restructuring is almost completed. H1, you booked quite a large provision, almost 50 million euros. Any sense on if you're going to use all those provisions or if a bit more is needed, or just a comment maybe on this provision and where you think you're going to end with the restructuring? Thanks.

Okay. On the number of shapes, what we can say on the 84 million tons per annum, is that 17 are not from Gulf of Mexico or Gulf of America, so to speak, to the rest of the world, where you have a very important shipping intensity, and in particular, as the Panama Canal is quite congested, and where the shipping intensity is something like 2.3. In fact, I consider 67 million tons are from Gulf of Mexico to the rest of the world, and the shipping intensity can be 2.3 or let's say two ships per million tons, to be cautious. For the rest, the 17 million ton, you are on Mozambique to the rest of the world, and the shipping intensity is probably zero or one ship . So, all together, it's a very, very large number of ships. Let's say, without being too specific, far more than 100 shits to be ordered and probably close to 150, around 150 shits ordered. As far as Lausanne is concerned, I'm going to hand the mic to Thierry.

Yes, thank you, Philippe. Yes, you are right to mention that we booked at the end of H1 between 25 and 40 million euros of cost to structure this affiliate. You have all the costs here. We do not expect additional costs because in this cost, I remind you, we have the final height of the Vendome Gigafactory and the write-off of this asset. And you have as well provision for the workforce reduction plan, so we do not expect additional cost at the end of this year for .

Okay. Thanks. Have a good day. Thanks.

The next question is from Jean-Francois Grandjean of OdoBHS. Please go ahead.

Yes. Good morning. Two questions from my side. The first one, could you come back on the LNG as a fuel? You mentioned some more or intensity competition. So could you give us more about that and what do you expect for you in terms of growth and trend for the development of this business? Do you expect some more delay or more time due to the more competition you mentioned? And the second question really concerns Danielek. You also mentioned some cross-selling and synergy estimated at 25 to 30 million rows. So in which timing do you expect that? And could you explain to us more how you expect to reach the search level of revenue synergy in the coming years? Thank you.

Okay, thank you. Well, on energy as a fuel, we have a competition from different containment technologies, which are called type B or type C, and which are using a thick plate of stainless steel, which has to be welded in terms of operation. It's something which is a bit complicated, but this technology has the merit to be very easy to install inside the ship. It can be lifted and posed inside the ship, which is very much liked by shipyards whenever they are quite busy. We need an installation in the ship, which is taking time and workmanship, even though materials are far less expensive. We are existing in this market, and it's a fast-growing market. We are keeping on improving our solutions to better exist in this market, and you're going to see how we progress in this market in the years to come. As far as Danelec is concerned, we are planning synergies between 25 and 30 million euros by 2030. And it's mainly obtained through cross-selling between the various activities of the various of Danelec. We had VPS, we had Essence Marocca, we have Danelec, and these three companies have a different portfolio of customers where we are going to try to sell the solutions of the others. That's basically where the synergies that we are going to try to obtain.

Okay, thank you.

Mr. Alberto Rotter, this was the last question over the phone.

Okay. Thank you. We do have one question coming from online from Jean-Philippe Desmartins at Edmundo Roche, asset management. Succession planning of the CEO position at GTT. Do you have an update to give?

Well, I will say that the special committee of the Board of Directors is working on that, and proper information will be given in due time. So if there is no other question, I would like to thank you for having attended this conference, and I hope to see you soon. Thank you very much.

Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones. Thank you.