Technip Energies Nv

Hello to everyone, and welcome to Technif Energy's first half 2021 results. We are delighted that you can join us today with our CEO, Arnaud Piertan, and our CFO, Bruno Weber, who will present our business and financial highlights and the outlook. This will be followed by Q&A. Before we start, I would urge you to take note of the disclaimer and language on forward-looking statements on slide two. I will now pass the call over to Arnaud.

Thank you, Phil. We are happy to be here with you today to present our financial results for the first half of 2021. Looking at the highlights, we have built upon a solid first quarter to deliver robust first half financials that strengthens our full year outlook. And we are raising margin guidance to a new range of 5.8 to 6.2%. Despite the backdrop that continues to be challenging to navigate and anticipate, Our teams continue to demonstrate remarkable ingenuity and results. We are achieving critical milestones on key projects, including Arctic Energy 2, where we have recently completed the first module in China, which are now ready, followed up. We have strengthened our energy transition positioning in several areas. This includes the commercial launch of our flagship blue hydrogen offering, Blue H2 by 10, a full suite of deeply decarbonized and affordable solutions for hydrogen production. And we complemented our existing suite of technologies with a proprietary floater through the full acquisition of InOcean and established a dedicated business unit for floating offshore wind. I will revisit these themes later in my presentation. In terms of headland adjusted numbers for the first half, we generated revenue of 3.2 billion euros with year-over-year growth of 8%. Recurring EBIT margin was 6.3%, up 80 basis points on the prior year, reflecting strong operational performance. And our backlog at the end of the first half stood at 17.5 billion euros, up 30% year-on-year. Turning to our execution, I will focus on accomplishments in the second quarter, where, as anticipated and communicated, our revenues grew 8% sequentially in line with our projected activity ramp-up. In project delivery, our LNG projects continue to progress. As mentioned on Article LNG 2, we have completed the first modules in China ahead of module loadout and first stowaway in the coming weeks and days. On Energia Costa Azul, we are advancing on procurement with over two-thirds of process equipment ordered, and we are starting to mobilize at site. And Coral FLNG for ENI is progressing with advances at the yard as well as offshore Mozambique in preparation for the deployment of the mooring system. As recently confirmed by our customer, Project Startup is on track for 2022. In other areas of the portfolio, our scope on Exxon's Bowman refinery expansion is nearing completion with the successful delivery of 17,000 tons of fabricated modules to the site in Texas. And in technology, products, and services, or TPS as we call it, the loading systems business continues to deliver products of quality on schedule with a shipment of 12 loading arms for the Hong Kong offshore LNG project. Finally, On the Yin Farm project for insects, where we are supporting the construction of a vertical farming facility for aquaculture and pet nutrition, the foundation stone laying ceremony took place amongst representatives of the French government. So in summary, despite the complexity around the operating environment due to the prolonged pandemic, we are continuing to deliver across our portfolio. Moving now to our recent commercial successes. While the key award in project delivery was for a new PTA plant for Indian Oil Corporation, a large contract that builds on recent projects award momentum in India, we had a very active quarter in TPS. In May, we announced two services contracts for Neste related to its Rotterdam Renewables Production Platform in the Netherlands. The first covers modification of its existing renewables production refinery to enable production of sustainable aviation fuels. The second is a feed for Neste's next possible world-scale renewable products refinery to be performed ahead of a planned FID around the air end. Also in the sustainable aviation fuel domain, interest in our proprietary ethanol to ethylene hummingbird technology remains strong, and we achieved our first catalyst supply agreement for Lantajet. Hummingbird is one of several sustainable chemistry technologies that we currently offer as part of our energy transition business. Finally, near the end of the first half, our loading system business achieved a breakthrough award for the Northern Line CCS project with a contract for the world's first liquefied CO2 marine loading arms. The level of creativity and innovation within our organization is immense. And we have a proven track record in developing first-of-a-kind process technologies and commercializing new technologies. With this slide, I want to share with you a few examples of how innovation and technology approach is making a positive impact for our clients in terms of product viability and for the environment. In the hydrogen industry, one of the main issues around 100% hydrogen firing in conventional burners is the quantity of nitrogen oxide produced. Our new technology not only provides a clear reduction in these emissions, but can also be utilized in other areas such as syngas and ethylene. SNAP-LNG is our proprietary productized offering for natural gas liquefaction that combines a compact modular design concept for mid-scale trains with standardized components and technology. Developed in collaboration with Air Products, the system benefits from speed to market with greater certainty around both cost and schedule, and best available process technology, refrigerant compression, and digitalization resulting in lower emissions and OPEX. And it is particularly suited and attractive for low to zero carbon footprint LNG and phased developments. Our approach to innovation takes many forms, but we often partner with companies across different industries to enhance our technology offering and explore new frontiers. One notable example of this is our recent partnership with a leading biotech company to integrate their bio-fermentation process with our AminBio technology. This will enable cooperation in a number of applications, including the conversion of CO2 to ethylene. As a result, We are modifying our catalyst test unit in our Boston lab to enable feedstock testing for various consumer applications. And finally, we were recently selected by Horizon Energy to perform a study for a concept development for the Barents Blue Carbon Neutral Ammonia plant in Norway. Here, with our partner, we will leverage technology, modularization, and integration expertise to perform concept work for what would be one of Europe's first large-scale blue ammonia plants. I will now turn the call over to Bruno to discuss our financial performance in more detail.

Thanks, Arnaud. Good afternoon, everyone. So, turning to the highlights of our first half performance. Revenues of 3.2 billion were around 8% ahead of the first half of 2020. with strong activity levels overall, including a continued ramp-up on Arctic LNG2, as well as initial contributions from major projects signed in recent quarters. Adjusted EBIT was $204 million, equating to a margin of 6.3%, an 80 basis point improvement year on year, benefiting from strong execution and a reduction in indirect costs. This very solid performance of the first half, plus the excellent visibility provided by our strong quality backlog, has enabled us to raise guidance for the full year, which I will detail in the next slide. For the top line, when we combine our H1 progress with our backlog schedule for the remaining six months of the year, we are on track to deliver our full year revenue guidance, which is unchanged. Adjusted order intake, was $7.9 billion, with a book to build for the first half of 2.4. Benefited from a second quarter announced award, including the petrochemical plant in India and the contract with Neste. Clearly, the Qatar NFE project in the first quarter also had a significant impact. Trading 12 months book to build for total company is 1.8. Net cash at period ends was 2.5 billion euros, stable quarter on quarter, but up against the 2.2 billion at the 2020 year end after the impact of the separation and distribution agreement. Turning to guidance, as I mentioned, based on our strong year-to-date performance and confidence in our mid-term outlook, we are pleased to raise our EBIT margin guidance and also narrowing slightly the range. We now expect margins in the 5.8 to 6.2 range up from the 5.5 to 6 previously. All other guidance items remain unchanged. Turning to our segment reporting, and starting with project delivery, which achieved revenue of more than $2.6 billion, up 7% year-on-year. The continued ramp-up of Arctic LNG2 was partially offset by a reduction in North America and Middle East downstream projects. As indicated by the backlog schedule, we anticipate a further modest ramp-up of activity in the second half with excellent visibility for the years beyond 2021. Adjusted EBIT for the segment was $168 million, equating to a margin of 6.4%. The margin decline was largely anticipated owing to the project phasing and backlog maturity, as well as a more complete corporate cost allocation. Our execution remains strong in a continued complex environment. Backlog is up significantly year-over-year at $16.3 billion, benefiting from major awards in both the first half, as already discussed, as well as the fourth quarter of 2020. In the last 12 months, project delivery has achieved a book-to-bill of 1.9. Turning to technology, products, and services, or TPS. Building on momentum established in the first quarter, we delivered double-digit revenue growth in the first half to over 620 million euros. This was primarily due to good growth across our services businesses and benefiting from continued strong order intake for loading systems. We expect to globally sustain this level of activity in the second half of the year. EBIT margins improved by about 100 basis points year-on-year at 8.8%, benefiting from the revenue increase and strong contributions from PMC and loading systems, and further supported by the full period benefit from costs actions undertaken in 2020. The strong revenue and margin performance have driven a significant 25% increase in EBIT year-on-year. Trailing 12 months, Book to Bill for TPS was 1.1, in line with our strategy to grow this business, leading to a period-end backlog of 1.2 billion, up about 6% year-over-year. Turning now to other key performance items across our financial statements and income statements first. Corporate costs were 18 million, which are trending slightly better than the anticipated quarterly run rate, due to strong focus on the global SG&A costs and a fit-for-purpose organization enabled by the spin-off. We may see a limited increase in the second half of the year versus this H1 run rate, But as mentioned during the first quarter earnings call, we do expect to have made significant progress on our target to reduce indirect costs by 20% versus the 2019 cost base. At 33.7, effective tax rate remains within our full year guidance range of 30 to 35%. Non-recurring items were 31 million, the large majority of which relate to the spin-off and were most incurred during the first quarter. Turning to balance sheet, we refinanced the bridge facility with our inaugural 600 million bond offering, which I will cover in more detail on the next slide. Net cash on our balance sheet at the end of the first half was 2.5 billion, stable versus last quarter, and up from the 2.2 billion year-end position supported by strong free cash flows year-to-date. Finally, net contract liability to that 2.9 billion at half-year, up slightly from the year-end position, but notably linked to the increase in accounts receivables, which are up about 240 million from the year-end position, largely due to cut-off and product milestones. As we have stated previously, This position can vary from one quarter to the next, but given the current backlog and our strong opportunity set, we see no reason for it to change by any material degree in the medium term. Turning now to capital structure and cash flow. In May, we successfully issued 600 million of senior unsecured notes due to 2028. in an offering more than three times oversubscribed. The notes are for general purposes, and obviously the full repayment of the 620 million bridge loan associated with the SPIN, which we actioned shortly after the bond issuance. Supported by our BBB credit rating with S&P Global, we secured favorable terms and conditions, including an attractive coupon of 1.12%. The new note extends the weighted average maturity of our debt portfolio to over six years. Now let's look at cash flows on the right. Supported by a strong operational performance, free cash flow for this first six months reached nearly 340 million euros. We more than held on to the working capital benefits accrued in the first quarter relating to the new world and key project milestones. Capital expenditure, of just 15 million again reflect the asset-light nature of our business model, with free cash flow equivalent to over 95% of our operating cash flow. Our expectation around the shape of our cash flows through 2021 has not changed. We continue to anticipate a stronger cash flow performance in the first half than in the second half. Looking below free cash flow, the main items include 20 million of share purchase from Technip FMC through the accelerated book building and about 70 million of financial debt reduction and lease principal repayment. We ended the half with nearly 3.2 billion of cash and cash equivalent, providing an excellent liquidity position further supported by the undrawn revolver credit facility. I will now pass back to Arnaud for the outlook.