Technip Energies Nv

Hello and welcome to TechniPedage's financial results for the first half of 2024. On the call today, our CEO, Arnaud Piertan, will provide an overview of our H1 performance and business highlights. This will be followed by our CFO, Bruno Biber, who will share more details on our financial results. Then Arnaud will come back to discuss the outlook before opening for questions. Before we start, I would encourage you to take note of the forward-looking statements on slide two. I will now pass the call over to Arnaud.

Thank you, Phil, and welcome everyone to our results presentation for the first half of 2024, during which we have secured strategic objectives and leadership in a high demand market. We've achieved a strong financial performance with double-digit revenue growth to €3.2 billion, reflecting notably strong volumes in project delivery, with large projects ramping up and with steady growth in TPS. At the bottom line, EPS grew by 50%, 5-0 year-over-year, benefiting from strength in margins and higher financial income, as well as the absence of material one-off factors that impacted H1 last year. This puts us well on track to deliver full-year guidance. Commercially, we secured two important awards for low-carbon energy plants in the Middle East, OACE in the UAE, and MARSA in Oman. And TPS achieved double-digit year-over-year growth in order intake. This momentum is reflected in a book to build of 1.3 year-to-date and positions us for another successful year for new awards. And as a result, our backlog has improved by 1.3 billion euros since the beginning of the year, to $17 billion, equivalent to nearly three times our 2023 revenues. Moving to operational highlights, where we continue to execute well across our portfolio of projects and TPS assignments. In the second quarter, the Midor refinery expansion, a facility that will deliver cleaner fuels to Egypt, reached nameplate capacity with performance tests executed successfully. In addition, We brought two FDN furnaces into operation on a shared skyline facility in the Netherlands. This brownfield project will replace 16 units by eight state-of-the-art modular furnaces using one of our many proprietary technologies. The total capacity of the plants will be maintained despite the lower number of furnaces. and the resulting improvements in energy efficiency will reduce the plant's annual CO2 emissions by approximately 10%. Overall, I am very pleased with our solid first half, and I am sincerely grateful to our teams for their continued dedication and professionalism. Moving to commercial highlights, where we achieved significant success in project delivery and saw continued strength in TPS orders. In the second quarter, two major low-carbon LNG developments reached final investment decisions, the ROES project for ADNOC in DOE and MASA LNG for Total Energies and OQ in Oman. Ten secured both. These projects set a new standard for decarbonized LNG production as both will integrate electrifying LNG trains powered by zero carbon energy sources and will be amongst the lowest carbon intensity LNG plants ever built. Turning to TPS, building on the strong foundation set in the first quarter, we delivered 14% order intake growth with first half awards exceeding 1 billion euro. In the second quarter, we were again successful in the carbon capture market through securing a second carbon capture services award for Exxon in Louisiana, in the U.S., adding to the award of La Barge from 2022, as well as a feed for Viridor's waste-to-energy facility in the U.K. In addition, in India, we continue to benefit from our presence in the IOCL Paradig Complex, where we secured a Proprietary Technology Equipment Award. Finally, we secured a five-year services field development agreement with KPO in Kazakhstan. In line with our conservative approach to backlog recognition for project management consultancy, or PMC, and long-term services agreements, this KPO contract will be progressively recognized in backlog as when work orders come into effect. In other words, the full value of such contracts is not reflected in backlog. In summary, an important quarter for awards that demonstrate our leadership in strategic markets. Turning now to other strategic priorities around innovation, partnerships and investments. TEN is dedicated to winning the affordability battle to deploy sustainable energy, reduce carbon emissions and accelerate circular solutions. In Q2, we successfully launched two new products. First, Relive, the joint venture we formed last year with John Coquille, launched Clear 100+, a pre-engineered and configurable productized plant for the green hydrogen market. Through Clear 100+, and future iterations, Relive will disrupt this promising market and break down cost barriers. While the market has been slower than expected to materialize, we are convinced that Rely's strategy to drive affordability through greater integration and innovation is the right path to allow projects of industrial scale to reach investment decisions. Second, Loading Systems launched the EMAC series, a suite of electric and automated loading arms designed to reduce the OPEX of our clients. Also in the quarter, We acquired a purification technology from Shell to enable us to accelerate the commercialization of our bio-to-glycol reactor technology and create a biosolution that uses glucose to produce monoethylene glycol, known as MEG, a product widely used across many industries. We'll finalize a pilot for the combined technology later this year and expect to deliver an economic solution for green polyester to the market in 2025. Finally, with the closing of the equal agent venture with SBM Offshore, we aim to accelerate deployment of industrial solutions for the nascent floating offshore wind market. I will now pass the call over to Bruno.

Thanks, Arnaud, and hello to everyone on the call. Let's first look at the highlights of our financial performance for the first half of the year on an adjusted basis. Revenues were 11% higher year-over-year at 3.2 billion euros, benefiting from the ramp-up of major projects as well as the steady growth in TPS. Recurring EBIT increased by 9% to 227 million. Margins were stable at 7.2%, reflecting solid execution and are consistent with full-year guidance range. We recorded our highest ever first half net profit, up 50% year-over-year to $188 million, benefiting from the operational performance, growth in net financial income, and the absence of material one-off factors. Turning to orders, where we booked $4 billion in the first half, owing to the previously mentioned LNG award for project delivery, and double-digit growth in TPS. Pre-cash flow, excluding working capital and provisions, was solid at 241 million, and closing net cash was 2.6 billion. So in summary, we have delivered a strong first-half performance across key metrics. Turning to our segment reporting and starting with project delivery. Revenues are up a significant 16% year-over-year to 2.2 billion as activity ramps up on the major NFS product in Qatar. At the same time, on-site construction activity on NFE is reaching its plateau at peak levels. As evidenced by recurring EBIT margins at 7.3%, execution remains strong and the 50 basis points Differential versus the first half of last year reflects a rebalancing of the portfolio with growing volumes from early phase projects. The resulting EBIT increased by a solid 8% year over year. Finally, backlog has improved by 8% since the beginning of the year to 15 billion, equivalent to 3.7 times 2023 segment revenues. and providing excellent visibility. Book-to-bill on a trailing 12-month basis is impacted by the massive, massive NFS award from Q2 last year falling out of the calculation. Given the very long cycle nature of this business internally, we focus more on the two-year book-to-bill, which is at 1.4 and is more representative of our growth trajectory. Furthermore, Our commercial outlook and pipeline of opportunities are strong, and we are confident that we can enrich this backlog with high-quality projects in support of our outlook. Turning to TPS, where business momentum remains strong. TPS delivered solid financials in the first half, with revenues up 3% year-over-year, resulting from excellent equipment deliveries as well as services work in sustainable fuel and plastic circularity, and continued momentum in study work across decarbonization markets. Segment growth margin improved by more than 100 basis points, reflecting our strategic emphasis and performance of the business. At the same time, and as discussed last quarter, we are investing for the long-term growth of TPS, through strategic development initiatives, increased R&D spent, and higher selling and tendering activity. As such, segment EBIT margin experienced a very slight decrease year-over-year, and recurring EBIT was stable. Turning towards, TPS achieved year-over-year growth of nearly 15% in segment orders to more than 1 billion. This order strength reflects high demand across the breadth of the TPS offering. TPS backlog close to the period at 1.9 billion, up 6% year-to-date. Turning to other key metrics, beginning with the income statement. Corporate costs of 20.4 million in H1 are trending below the run rate for 2023 that was somewhat impacted by strategic projects and pre-development initiatives. The net financial income line is very strong and more than 20 million higher year over year, driven by higher global interest rates and growth in cash investments. For the full year, subject to stability in global rates, we could anticipate a contribution of north of 100 million. Lastly, on the P&L, at 28.5%, the effective tax rate is in line with the 2024 guidance range. Turning to balance sheet, where cash of 3.3 billion is significantly in excess of the net contract liability, which, as a reminder, contains future project costs, future margins, and contingencies, has stated into one Existing projects in backlog plus expected awards in the next 12 to 18 months will continue to contribute to this differentiated capital structure. Finally, growth debt remains stable with over 80% long-term debt with maturity in 2028, a comfortable position. Before passing back to Arnaud, let's conclude on cash flows. Free cash flow excluding working capital was 241 million and consistently strong, supported by cash conversion from EBIT above 100%. This showcases the strength of our operational execution and the tailwind of the net financial income. Capital expenditure at 29 million was higher year over year due to investment in the regional demonstration plan which Arnaud will come back to later. Working capital was an outflow in the first half of $335 million, largely impacted by timing and cutoff items. There was limited impact on working capital inflow from project delivery awards in the second quarter, with cash advances and milestone payment expected in subsequent quarters, while we made some specific supplier advances on more advanced projects in the portfolio. As such, we see the working capital trends somewhat reversing in the second half. Lastly, on shareholder returns, we paid $102 million in cash dividends to our shareholders in May, as well as $38 million related to the ongoing share buyback program. We end the period with $3.3 billion of cash and cash equivalents. I'll now turn the call back to Arnaud for the outlook.