Technip Energies Nv

Hello and welcome to Technip Energy's financial results for the first quarter of 2026. On the call today, our CEO, Arnaud Piertan, will discuss our Q1 performance and business highlights. This will be followed by a financial review by CFO Bruno Weber. Arnaud will then return for the conclusion before we open for questions. Before we start, I encourage you to take note of the forward-looking statements on slide three. I will now pass the call over to Arnaud.

Thank you, Phil, and a very warm welcome to our first quarter results presentation. Let me start by sharing the key highlights of our performance. First, a comment on the situation in the Middle East. I want to reassure you that all our projects under construction are intact, no damage to the work, and no cancellation And more importantly, everyone is safe. Of course, we have faced operational disruptions stemming from the conflict, but our first quarter results underscore the resilience of Technic Energies. Owing to the adaptability and unwavering commitment of our teams, we limited the revenue impact to just a 4% decline year over year, with EBITDA down 8%. Importantly, our robust underlying cash generation continues to set us apart. Despite the challenges, we successfully converted nearly 90% of our EBITDA into free cash flow this quarter. This achievement reflects the quality and breadth of our order intake over the past few years and our focus on operational excellence. The situation in the Middle East remains fluid and is expected to affect our 2026 financial outlook. I will provide further detail in the next slide, while Bruno will later discuss our new conditional guidance. On the commercial front, the first quarter marks one of the strongest periods for order intake in our history, with more than 6 billion euros of new awards. These significant wins reinforce our leadership in LNG and sustainable fuels, and we have driven our backlog to a new high of more than 20 billion euros. Let's now take a look at the operational, financial, and broader implications of the Middle East situation. we stand in solidarity with all those affected by the conflict. From its outset, Technip Energies implemented a comprehensive crisis management framework to safeguard our global workforce and protect our contractual positions. Some of our worksites experienced temporary stoppages, followed by phased resumptions under enhanced safety protocols, working at all times in coordination with authorities and customers. Currently, our sites are nearing full mobilization. While the situation in the Middle East remains fluid, we see two main channels of impact on our business. First, project execution, where progress has been affected by site disruptions and logistical challenges, deferring revenue into later periods. Second, incremental costs are being incurred for safety and business continuity. While we expect cost recovery through strong contractual protections, the exact timing and extent is dependent upon the evolution of the conflict and the progress on commercial discussions. For these reasons, and assuming the situation in the Middle East normalizes by the end of the second quarter, We have recalibrated our backlog schedule and estimate that around 500 to 600 million euro in revenue will be deferred beyond 2026, while the impact on projects margin should be substantially mitigated. A supply shock of this magnitude reinforces three structural trends we are already seeing in our market. diversification of supply routes, diversification of energy sources, and a greater premium on security of supply. In practical terms, energy security drives stronger investment in energy infrastructure and new energies. It translates into more upstream investment, additional LNG capacity, and increasingly floating LNG solutions to accelerate time to market. It also elevates the value of resilience through circularity, regionalization of supplies, and solutions that improve sovereignty and supply certainty. In this environment, Technip Energies has a critical role to play, helping customers progress energy security while continuing to deliver decarbonization. In addition, TEN will also very likely be active on Middle East asset reconstruction, given our pertinence in the region and our proximity to customers. Supported by the continued execution of our strategy, our financial strength, and our global presence, Technip Energy is exceptionally well positioned to navigate the current uncertainty and to thrive in the years ahead.

Now let's look at our near-term commercial momentum with 2026 off to a strong start.

We achieved considerable commercial success in the first quarter with more than €6 billion of awards, exceeding our total order intake for the whole of 2025. Key wins included an award for Europe's first greenfield sustainable aviation fuel plant for Sky Energy in the Netherlands, further confirming our leadership in SAF, where we have delivered around 60% of the global capacity. And in LNG, we reinforced our position through two additional megatrends for Qatar Energy's North Field West project, a further trench of work to advance Coal Norte for ENI in Mozambique, and a substantial limited notice to proceed with Commonwealth LNG in the U.S. These awards have materially strengthened our backlog to a new high of more than €20 billion, reinforcing our medium-term growth outlook. And furthermore, our near-term commercial pipeline remains buoyant. We anticipate an additional €6 billion of new orders in the coming months, further diversifying our exposure outside of the Middle East and with potential to drive our mid-year backlog to above 24 billion, some 50% higher versus the start of the year. In summary, our selectivity-built backlog continues to strengthen with high-quality new awards underpinning our growth outlook beyond 2026.

Before passing to Bruno,

Let me give you now an update on Reju's progress in building a circular textiles ecosystem. Reju combines the agility of a startup with Technip Energy's resources and execution capabilities to convert the challenge of post-consumer waste into an economically viable venture. Since our last market update a year ago, Reju has progressed across the key work streams required to move from concept to execution. Technology maturation, site selection, funding, and working towards securing vital pathways for feedstock and offtake. Reju's development is also supported by a more constructive regulatory backdrop, notably through Europe's Extended Producer Responsibility, or EPR, framework. For many months, we have been producing at Regeneration Hub Zero, our demo plant in Frankfurt. The product, Reju Polyester and Reju Yarn, has been provided in tons to leading brands for testing and validation. And we are putting in place certification to confirm end-to-end traceability from textile waste to Reju Polyester. We have preselected three sites, two in Europe and one in the U.S., for what would be industrial-scale facilities. Importantly, in March, Riju was awarded 135 million euros in Dutch NIKI funding for its first plant, an important external validation of the technology and our team. The grant is a meaningful step on the path to a final investment decision potentially later this year or early 2027.

As we move forward, we remain disciplined.

Key priorities include finalizing long-term feedstock agreements to de-risk input supply and securing multi-year off-deck agreements for redo, RPT.

Finally, we are focused on ensuring the business model.

It needs to deliver accretive financial returns and it needs to enhance Technip Energy's quality of earnings over time.

I will now pass the call over to Bruno.

Thanks, Arnaud. Good afternoon, everyone. Let me take you through the standout points of our financial performance for the first quarter presented on an adjusted IFRS basis. Revenues were $1.8 billion, down 4% year-over-year, showcasing our ability to remain resilient amid foreign exchange headwinds and ongoing conflict in the Middle East. Lower revenues, together with additional costs incurred for safety and business continuity in the Middle East, resulted in EBITDA falling by 8% to 149 million. EBITDA margins declined by 40 basis points compared to last year, reflecting the challenges described and an absence of notable milestones in the broader portfolio. Diluted EPS came in at 48 cents, a decrease of 14% year-to-year, primarily driven by the EBITDA trend, lower net financial income, and increased non-recurring items, particularly those related to the positive development of REJU. Pre-cash conversion from EBITDA, excluding working capital and provisions, stood out at a robust 89%. which is especially impressive given the operational disruption we face in the Middle East. Finally, on the commercial front, we secured more than 6 billion in new awards. This achievement positions us for what could be our strongest year ever for order intake. In summary, I want to commend our teams for delivering a resilient first quarter in testing circumstances. Let's turn now to our segment reporting, beginning with project delivery. Revenue for the segment reached 1.4 billion, representing a 4% decline year-over-year. While we saw planned growth in LNG and decarbonization projects in the US and Europe, this was offset by two main factors. First, foreign exchange, where a significant strengthening of the euro against the US dollar reaching 1.7 in this quarter compared to 1.05 in Q1 last year, created a substantial headwind. Second, Middle East. As a direct result of the conflict, project execution in the Middle East experiences local logistical challenges and site disruptions impacting our progress. Combined, those two factors constitute a revenue headwind for the quarter of around 200 million. Adjusted recurring EBITDA for Q1 reduced by 80% year-over-year, landing at 94 million. EBITDA margins was 7%, down 110 basis points compared to last year, largely due to additional safety and business continuity costs associated with Middle East projects. The remainder of our portfolio performed on plan, albeit without any meaningful project milestones. Finally, our backlog stands at a robust 18.7 billion, equivalent to 3.5 times 2025 segment revenues, providing excellent visibility going forward. As Arnaud outlined earlier, our commercial pipeline positions us well to reinforce this backlog with high-quality prospects to support our medium-term performance. Now let's focus on technology, products, and services. TPS revenues were 2% lower year-over-year, mainly due to foreign exchange headwinds and reduced contribution from SEL and equipment. However, this was partially offset by strong progress on the CO2 absorber for the net zero T side, solid services volumes, and an initial contribution from AMNC. At constant exchange rates, revenues would have shown modest year-over-year growth. Recurring EBITDA margins were extremely robust, rising to 15.3%, an improvement of 80 basis points year-over-year, and driving EBITDA up 4% to 68 million. Segment margins were enhanced by strong execution on proprietary product contracts, improved profitability in consultancy and services, and the contribution from AM&T. As we expect the quarterly run rate in revenue to pick up in the balance of the year, margins may normalize closer to our full year guidance. TPS orders for the quarter totaled $353 million. Secured work was primarily services-based, covering a broad range of studies, services, and PMC call-offs. as well as a contract to provide our reform of technology to an hydrogen project in Africa. Looking ahead, we see positive award momentum for services, products, and our equipment. At period end, the TPS backlog was close to 1.5 billion, in line with recent trends. Let's now review other key financial metrics, starting with the income statement. Corporate costs totaled 13 million, marking a significant reduction year-over-year. This figure aligns closely with our underlying corporate cost run rate. Just as a reminder, Q1 2025 included additional French social charges relating to long-term incentive plans. As a point of note, there is no impact of ESOP 2026 our employee share ownership program in Q1 2026. However, once implemented, this non-cash item will, on the face of the P&L, increase full-year corporate costs, potentially pushing them to the upper end or even above our guidance range. Net financial income remains healthy at 21 million, albeit with a downward trend year-over-year because of lower global interest rates. Lastly, on the P&L, At 28.3, the effective tax rate is consistent with the 2026 guidance range. Turning to our balance sheet, our financial position remains exceptionally strong, a true point of differentiation for TEN. Gross cash reached 4.2 billion and is significantly in excess of the net contract liability of 3.6 billion. The combination of projects already in backlog and anticipated awards through 2026 and beyond will further reinforce this robust capital structure. Finally, gross debt has decreased compared to year-end levels, following a period of normalization after the AMNC acquisition last December. Let's now focus on our cash flow performance for the quarter. Free cash flow, excluding working capital and provisions, reached $132 million, with a solid 89% conversion from EBITDA. This result underscores our strong operational execution and the benefit of positive net financial income. Looking forward, we anticipate maintaining free cash flow conversion within the 70% to 85% range. In terms of working capital, we saw a significant inflow of $273 million as customer payments were received and the reversal of some specific factors from the prior quarter. It's worth noting that working capital remains uneven, largely due to the nature of our long cycle product delivery segment. On the financing side, we repaid $75 million in short-term debt and have initiated our $150 million 2026 share repurchase program. We closed the period with $4.2 million billion in cash and cash equivalent, our highest position since company's inception. Before handing the call back to Arnaud, I'd like to outline our new conditional segment guidance. For context, this conditional guidance incorporates the year-to-date operational performance, factoring in the latest insights from April, and assumes the conditions in the Middle East will normalize by the end of the second quarter. As Arnaud has mentioned, despite the world disruption to normal workflows and productivity, our projects in the region are progressing. At present, all projects have enough workflows to maintain near-term momentum. Some sites have all the resources required for this to continue through to completion, while others depend more on the timely arrival of bulk materials and equipment, typically shipped through the Strait of Hormuz. Within this conditional guidance, we assume the trait will fully reopen by the end of Q2, although we can take advantage of alternative logistics solutions for many projects. Its extended closure remains a primary risk to efficient product execution as not all equipment are trackable. Given these assumptions, Now, updated expectations is for project delivery revenues to be within a range of 5.7 to 6.3 billion, which, even at the low end, still indicates year-over-year growth. Thanks to strong contractual protection, the impact on project margins should be substantially mitigated. We may, however, incur incremental costs for safety, business continuity, and the outcome of commercial negotiations. Therefore, we now anticipate EBITDA margins being in the range of 6.5% to 7.5%. At this early stage, we've taken a relatively conservative stance in this projection, notably in terms of contingencies. Technology, products, and services is comparatively insulated from the situation in the Middle East, though some consulting and services contracts in the region may be affected. Accordingly, we are widening the revenue range to 1.9 to 2.2 billion, lowering the bottom hand while retaining the top hand. Our margin expectation for TPS is unchanged, bolstered by a strong first quarter. All other guidance items are unchanged. Looking beyond 2026, based on the quality of our backlog, our contractual discipline, and our commercial opportunity set, our medium-term trajectory remains firmly intact, and we expect meaningful recovery in the coming years. I now turn the call back to Arnaud.

Thank you, Bruno.

So to conclude, we delivered resilient first quarter revenue and EBITDA despite operational disruption linked to the Middle East conflict. And we've maintained robust cash generation. Commercially, we had an excellent quarter, securing more than $6 billion of awards that strengthen our backlog to record levels and reinforce our outlook. And looking ahead, Technip Energies is uniquely positioned to serve both oil and gas-based economies as well as energy importing regions that are shifting towards lower-carbon systems.

Our priorities are clear.

Execute safely and reliably while protecting margins through disciplined project and contract management. Continue to build a diversified pipeline that supports sustainable growth. And deliver on our strategy to enrich and grow our TPS portfolio, deploying capital to enhance our differentiation and quality of earnings.

Before closing, a final point.

Since inception, Technip Energies has successfully navigated through numerous challenges and crises, always demonstrating tenacity and resilience. Each time, we have emerged stronger and more united. Today, we are approaching the current situation with the same determination and forward-looking spirit, while actively preparing the group for the future and the opportunities that lie ahead. With that, we can now open for questions.

Thank you. The first question is from Sebastian Erskine of Rothschild & Co. Redburn.

Good morning, gentlemen. We've seen kind of third-party estimates for the repair and restoration costs for energy-linked infrastructure in the Middle East could title as high as $58 billion. And clearly, you are the incumbent in Qatar for their LNG infrastructure, and you're also heavily involved elsewhere in the region, including in Bahrain and the UAE. Can you maybe give us any indication of your preliminary discussions with the NOCs in the region, kind of regarding their thoughts on critical repair work, and any indication of the kind of potential scale or what that might look like over the coming kind of 12 to 18 months? Thank you.

Yes, Seb, thank you. So I won't comment on the total scale of the repair work and scope that is ahead to come in the Middle East. But certainly, and you're right to point out to the fact that we are incumbent in many of the infrastructures, and we have a strong presence, of course, in Qatar and beyond. I may actually come back to the situation in Bahrain. So at the moment, and it is very important in those, I would say, times to stand by our client's side, which is what we are doing, and to propose solutions to the challenge that they are facing for a swift recovery and repair of some of the damaged infrastructure. So as I pointed out a bit earlier, We, as Technip Energies, have not suffered any damage to our ongoing work. In this case, the infrastructure that has been targeted was more finished and completed infrastructure, which maybe sometimes was live and operating. It was probably, for the NME, a better target than work under construction. It is about standing by our clients. and it is a real opportunity for Technip Energies. It is a little bit early to tell you about the size of the opportunity. It is meaningful, but we will also find a contractual mechanism with our client that is, I would say, reflective of the situation. In other words, let's provide what is quality work And let's not go chase for volume. There are circumstances where it will be easier to achieve, I would say, the type of pace and cadence that we need for the repairs if, jointly with our customers, we suggest that they proceed with early procurement while we focus on engineering and assessment of the damage. It might not translate into, I can't remember which number you used, you know, tens of billions of EPC opportunities, but it will translate into, I would say, real services opportunities and reconstruction opportunities, which might be lonesome or not. So the size is yet to be confirmed down the road. And what is important is that I signal, and I will make a point here, it is important to be by our client's side, and we will absolutely not take advantage of the situation.

Very clear. Thank you, Arnaud. And my second question is, you know, we know that you have a strong record on risk management and a conservative approach to accounting. Can you share whether you took any provisions related to the Middle East conflict in the first quarter and whether we might expect you to take kind of more going forward that would impact the EBITDA margin?

Thank you. You know, let me help you, I mean, help maybe everyone on the call understand a bit the circumstances behind the conditional framework. And my answer will be a little bit long, but I'm sure I will probably answer some of the questions that are coming ahead. So we have established key assumptions for this conditional guidance. which are that the conflict resolved and the Strait of Hormuz is reopened by the end of the second quarter, and also that there are no material secondary effects to the situation. I will repeat what I stated. Nothing is canceled. No project is suspended. And when we talk about a change of guidance for the top line between $500 million to $600 million, It is all about deferral of revenue. It's not canceled revenue. So those are not missed sales. Those are sales that have been secured and are secured and for which the revenue will be recognized later down the road. It does equate to about 10% of our expected project delivery revenues for the year. So I think we've done, together with our clients, a good job mitigating the impact of this conflict and war. I would characterize our project into four buckets. The projects that are, I would say, mature, where procurement campaigns are complete and all equipment has been delivered, Here, you know, the disruption actually affected operations in March and April, but the impact should be less in the coming month. But we've taken a conservative view nonetheless. And the impact would be less because we have all equipment to progress with the work front and to keep the teams and the tens of thousands of workers busy. You have, you know, on the other end of the spectrum, early-stage projects that are absolutely not affected. They are in engineering phase and workforce not yet mobilized on site, and we are really just starting with engineering and procurement. So very little impact on those early-stage projects as for the mature projects. There's a third category. The mid-cycle projects where procurement is largely complete, all POs are being placed, if I may say, but not everything has yet been delivered to site. A large quantity has been delivered, sometimes north of 60, 65, 70 percent, but we are still expecting some deliveries to site. There, that's where the logistic constraints are more challenging because we have already highly mobilized the workforce, the construction workforce, And there may be a risk of workfront drying up if we are unable to unlock the alternative logistics route. So here we have assumed a continued level of disruption all the way through the end of Q2. Let me nonetheless reassure you, we have alternative routes that have been identified. Those routes are being developed in conjunction with our clients, and this is where working side-by-side with your client is important because the alternative to the usual logistical routes can be also more costly because they take longer, you have more marshalling. So they are a source of additional costs. And so the choice of going for the normal route to the alternative is one that is made. It's decisions that are taken jointly with our customers because, of course, we want to be assured of cost coverage. And the third or fourth, I would say, category of project, and we only have one, and you mentioned Bahrain a bit earlier. You know, well, there's one project that has suffered permanent damage, but the project was no longer under construction. We were actually handing over the facility to the client. And this one, there would be – there's no immediate progress. It's about assessing the situation and assessing how to actually – allow the repairs and the client to resume with the work. In that context, we have taken, I would say, a fairly conservative approach. You know Technip Energies, you're starting to know us, Bruno and myself. In these circumstances, it's a bit like the Iron Dome, for the lack of a better comparison. It is mostly protecting the populations, but from time to time you will have weapons going through the Iron Dome, despite the two or three layers of protections that it provides. And so we have decided, conservatively, to assume that there will be some, I would say, costs associated to the situation coming our way, maybe falling into what I would call a bit of a grey area, And that, you know, we would have to cover. Some of those costs that you heard from Bruno were actually about doing the right thing. It was about keeping our people safe and comfortable, extra rotation, some repatriation and unsafe safety measures, et cetera. So we've taken a conservative approach. but within the assumptions that I've said. So, conflict resolves by the end of Q2 or somewhat, and no material secondary effects. So, yeah, a bit of conservatism built into our decision to revise the number for the year. And a very important note, okay, all the costs that we've incurred and for which there might be at the moment uncertainty in terms of cost recovery. Well, they will form part of, you know, future conversations or ongoing conversations with our clients for recovery. But importantly, you know, those costs incurred during this phase are not directly, you know, contributing to a project's progress, and therefore we have decided to treat them outside of the usual project's cost. So you may want to think about them as a non-recurring item, if I may say. And we've decided to do so in order to preserve the future project margins. So in other words, if I want to oversimplify, we've not tapped into the future in order to address and look good in the short term. We've decided to show the situation the way it is and the way we're experiencing it.

Understood. Thank you very much.

Thank you.

The next question is from Alejandra Magana of JP Morgan.

Hi, good morning. Thank you for taking my question. On the new conditional 2026 guidance, does this revised range already reflect the full set of mitigation options currently available such as alternative logistics routes? And if disruption extends beyond the end of 2Q, How should we think about the incremental impact versus what is already embedded in the four-year guidance? Would it be broadly linear or could it become more or less severe over time?

The new conditional guidance does include and does take into consideration the remediation routes that are being considered. If the situation is expands beyond the end of Q2, well, the impact should be, I would say, we'll see. It really depends. But like I said, the early stage projects and mature projects, assuming there's no more bombing and bombarding, then the mature projects will progress naturally because those As I explained a bit earlier, those have everything they need with all the work fronts to progress all the way to completion. So there will be no impact. If there is still disruption because of the Strait of Hormuz not being reopened or not being partially reopened, then only the mid-cycle projects will be affected. But it's a little bit too early to assess to what extent. because it depends on the efficiency of the alternative routes that we are implementing at the moment. So we are still finding out the efficiency of the backup solutions. They look promising, but if it extends beyond Q2, then conceptually you have to imagine that only the mid-cycle projects would be affected, the others likely not.

Thank you. That's very clear.

And switching gears, on TPS, you've previously discussed some normalization in margins, X, A, M, and C, in 2026. Given the 1Q strength and the drivers you highlighted, including improved consulting profitability, could you help us think about how the underlying margin is tracking versus your prior expectations? And was the quarter strength mainly organic, or was A, M, and C also ahead of plan? Thank you.

Yeah, absolutely. And Bruno will take this one.

Thanks, Arnaud. Good afternoon, Alejandro. So TPS from a top line was a bit soft. And as I said in my prepared remark, we would expect a pickup in the coming quarters, including MNC. I think MNC had, it was partially planned, plus relatively slow first quarter because of different reasons. Most of the refineries and pet chem assets outside the Middle East were running at 100%, so not the time to refill catalysts and so on. So you would expect the Q2, Q3 to ramp up, including for MNC. So we should expect a pickup in revenues in the quarters to come. And that will also be accompanied as some of these revenues step up with a bit of a normalization. I think the trend is looking good. The quality of the services, the differentiation, the technology portfolio and the licensing, I think a lot of focus has been brought on that. So as revenues increase, we haven't changed the guidance and we see a bit of a normalization. but you should still see a good momentum on the bottom line as you see a pickup in the top line.

Very clear, thanks.

The next question is from Richard Dozon of Barenburg.

Good afternoon, and thank you for taking my questions. Two from me, please. How should we think about this 500 to 600 million of deferred revenue from this year? And how does that impact project execution? So when you look to next year, do you think some of those project timetables could be accelerated to sort of deliver some of that revenue on top of what was already expected for 2027? And then secondly, on the repair and reconstruction work, how would this additional work fit around your existing backlog commitments? I mean, I appreciate you've got a very big backlog in Qatar. So do you have the capacity to do it all, so that the reconstruction plus the expansion works for the Northfield projects? Thank you.

Hi, Richard. So starting with your second question, yes, we do have the capacity to support Qatar Energy in their repair effort for the train number four and number six, which have been touched or damaged. To that effect, we mobilized a dedicated team. It has been in agreement with our client. It's been decided that it was extremely important to them to not tap into the resource pool made available on NFE and NFS and as we are also mobilizing on NFW for the repair work. So we have a dedicated repair team that is separated from the NFE, NFS and NFW teams. And the scope that will be secured through the repair work will come in addition to the scope that is already secured. And as you rightly pointed out, because we have quite a bit of work in Qatar already, it may be that there we favor you know, other contracting schemes than the traditional ones, you know, which historically have been more towards the lump sum turnkey. In this case, we may be more towards, you know, a form of PMC and services and reimbursable and EPSCM. So that is still under discussion, but we will – the answer to your question is dedicated team – Yes, we have the capacity to handle. And three, the contracting scheme may be a little bit different in order to, you know, address, I would say, the level of exposure we already have in-country. But the important thing, and I repeat it, I repeat what I said earlier, is to be by our client side and to be a force of, you know, proposition and solution seeking and solution finding and there's quite a good dynamic from what I can observe and a lot of reactivity and the pace is actually quite strong on this one. So now about the 5 to 600 million euros shifting from 2026 revenue into subsequent years, well part you will see coming maybe as an addition to 2027 but But also, you know, we'll go probably into a bit beyond 2027, because when you have a, you take a project like NFE, for example, where the trains that were supposed to be delivered were imminently being delivered, where they shifted a little bit to the right, and we are working with our client to actually see what can be done for accelerating the delivery of those and also mitigating the impact on the subsequent train. So it won't be an automatic adder to 2027. You may have some, I would say, spilling over 2028 as well to some extent. What I can describe nonetheless from what is happening on the field is a strong appetite by our client to, I would say, accelerate and secure the delivery of the trains at the soonest. So the motivation and the engagement by the teams and our client's team is super strong to execute with pace while executing safely. So there will be some speedover in 7 and 27 and maybe a bit of a leftover into 28. That's what I can picture at the moment.

That's clear. I appreciate it, Kalle. Thank you.

The next question is from Matt Smith, Bank of America.

Hi there. Good afternoon. Just the one question left for me, and that was to touch on your cash flow generation. particularly strong in the quarter, notwithstanding the events in the Middle East, as you highlighted, helped by working capital inflows. I was just hoping you could give us a bit more color, you know, based on your latest, you know, revenue and EBITDA guidance, how would you expect your cash flows, and in particular the working capital line, to evolve throughout the rest of the year, please? Thank you.

So maybe I'll take this one.

I think it's a question for Renaud.

Hi, how are you? Good afternoon. So yes, robust Q1 cash flow generation. As always, X working cap and provisions maintaining a high conversion, just north of 85%, which is what we've guided to. And of course, that's benefiting from the tailwinds of interest rates. So we are Actually, from my position, still quite happy when I see Fed and ECB confirming the rates. That means that continuing tailwind. From a working cap standpoint, in Q4, although it was not totally visible, but you had a few items around AP and AR, which reversed in Q1 as expected. And that, again, created a bit of a boost to the Q1 figures. Going forward, I would say that for now, we've seen absolutely no delay in payments on the project in the backlog. So as always, I think the trend from the current operation X working cap, you should continue to have a high conversion around 70% to 85%, as I said. And then from a working cap position, The recently signed projects, when they will start to be into force and as we build, they will contribute positively. And at the tail end, you should see for tail end projects a bit more than one as usual. But overall, you should not see a very material movement in working cap over the remaining of the year. It should be more pretty much net kind of amount.

Thank you very much.

The next question is from Jean-Luc Romain, CIC, CIB.

Thank you for taking my question. It relates to the participation you took in the DESIR project in France. How does this work? Do you kind of take a participation in exchange for services? Is there some cash involved? And what kind of participation do we talk about? Is it like 10% more? How should we view that? And how should we view the future of that kind of way to be more involved in the client's outcomes?

Hey, Jean-Luc. Thank you for your question. So I would start and then hand over to Bruno. So the investment into the DESIR project, which is about e-fuels, basically confirms Technip Energy's commitment towards sustainable aviation fuels in particular, and the, I would say, pertinence of this source of energy in a world that requires diversification of sources and maybe a more regional supply. for regions such as France and Europe, which are not oil and gas rich the way other parts of the world are. I indicated that Technip Energies has been involved in, actually involved, you know, 60% of the total world capacity of SAF emanates from Technip Energies engineering and all projects performance. and that shows our commitment to this business stream into the future. And yes, indeed, the idea of investing into the project comes with a number of conditions, including on the recovery side, and I'll hand over to Bruno. But we view our mission, but beyond that, you know, our future profitability and the quality of earnings as being enriched by this type of move and the investment that we've made into this year to unlock, I would say, or to contribute to unlock the project. Bruno?

Yes. Thanks, Arnaud. Good afternoon, Jean-Luc. So, by far, it's not a controlling stake at all, and that's not the purpose. So, We're not also a financial investor, so it gives us an ability to really become a partner for this project. Of course, for this kind of product, we have all the relevant technologies from carbon capture to, of course, green age tools and so on. So we're a bit of a natural partner of choice, but we are also ready to take commitment. And through the work that we start to do on adjacent business models, I think this fits nicely with that, for us to be able to partner, to bring value on both sides, not to buy a project, but really to be able to add value on both fronts, also to learn from those reputable and very experienced operators. So that gives us a better insight on the market. potentially means that we de-risk and we retain more value, and it maybe helps unlock some of these projects, so a bit of a triple win situation.

Thank you.

The next question is from Mick Pickup, Barclays.

Good afternoon, everybody. Just a quick question. One of your competitors last night talked about more enthusiasm for projects outside the Gulf already accelerating, and they were talking about green ammonia and other things. I'm wondering if you're seeing the current situation accelerating opportunities elsewhere?

Hey, good afternoon, Mick. We see, I mean, let's be honest, for us, we see, I would say, the same level of interest for... the alternative molecules or energy sources outside of the Middle East notably India where we are already present because we are executing a project with and for Greenco over there and yes we see I would say where there may have been a bit more hesitation in the past around the second trench of the project we see maybe a bit of a renewed energy and interest for trench number two and Now, it's not a tsunami of new inquiries related to those new molecules, but we do have some positive vibes from some regions around that. But it's also true for, you know, more LNG, more floating LNG, and if it's not an necessarily totally new. I mean, the inquiries and the, I would say, the pace and the cadence in the dialogue is related to existing opportunities such as Abadi and others. But the, you know, if I may give a bit of an opinion regarding what this current situation should trigger, I think, you know, you can imagine a scenario with three acts. One, it's about reconstruction in the Middle East, and we will be part of it in a way or another. For me, a second act could be, and maybe will be, we'll see, the GCC countries deciding to act in order to reshape a bit the export routes, and that should be and could be the opportunity for some of us to be part of building an alternative infrastructure. And then maybe a third act for, you know, in the rest of the world, excluding the U.S., which is, you know, oil and gas rich, a bit of a race to diversification of supply, a bit of a reshoring driven by national security agendas and creating, you know, some spare supply and capacity beyond, you know, the strategic reserves that every country has. So that calls upon more regionalization, more regional supplies. It means that circularity should have a bright future as well, and we'll be part of all that. So now, let's be frank, and we are always honest on this call. Like I said, it's not a tsunami of new inquiries, but I would say renewed energy in the conversations around those topics.

Magic. And on the circularity, obviously, you had a slide on REJU. You've got two lots of funding in now. You've got supply chain sorted up. What else do we need to get to FID? And I think that second lot of funding's got a pretty tight time frame that the funding's available. So when do I hear news?

I've learned through the Rejuventure that the textile industry, but also other industries that have been using polyester for some years now or decades, for them to move from other types of material to polyester, it's taken some time. They've had their share of pain actually moving from the past solution to the polyester solution. Here, we're still remaining with the polyester, but the brands have an incompressible qualification program for any new material. It remains a polyester, but it's a polyester that is from a different source. And therefore, the testing program is kind of incompressible. Before, they will commit to move from a joint development agreement, the JDAs, to firm purchase orders for a large quantity of material. So we are in the middle of the qualification process with some of those brands at the moment. We will have the outcome of their trials, I would say, within Q3. And then we're hoping for the signing of firm orders later in the year or early into 2027. That's what's missing because the rest, from the technology to the feedstock, it looks like we've built an ecosystem that is pertinent. The certified traceability is getting there as well. And the funding certainly, I would say, guarantees and strengthens the commercial nature of the venture. Therefore, it will be a profitable venture. So it's mostly around signing the off-take agreement for which we are... waiting for the completion of the qualification programs with the brands. But so far, so good.

Thank you. The next question is from Kate of Sullivan City.

Hi. Thanks for taking my questions. So you completed the first major acquisition last year. Reflecting back now, what have been your key learnings from the AM and C transaction, and how is the integration progressing? Just on the M&A to grow the TPS division, what adjacencies are most interesting at the moment? Thanks very much.

I'll hand over to Bruno because I've been talking too much, but I'll be happy to compliment at the end if needed.

Lessons learned. So maybe we should do more M&A because the highest ever share price was on the day we announced the M&T, so I don't know if there is a correlation, but at least one milestone. I think the We've completed very late Q4, this acquisition. So Q1 was all about integration and making sure that we had a kind of a smooth integration, alignments of systems, but business continuity. Even more so business continuity when you have such a disruption on a worldwide basis. and the one we've seen for assets in the Middle East being impacted and other assets around the world having to cope with these shortfalls or having to recover. I think the level of work from an R&D, from a commercial standpoint, from all the teams working together, I think has been extremely positive. And I think we see the benefit of bringing new expertise of catalysts, of materials, to our teams and to our domain of expertise and how this can be applied to our technology portfolio and also what we can bring from a process standpoint to their team. So we see those complementarity. We see, as I said earlier, That, you know, revenues should pick up in the coming quarters and the teams work extremely well. So, you know, it was not about consolidation of, you know, and market share. So, it's not about cost synergies, it's more about the revenue synergies. We start to see a stream of that. But, okay, as always, revenue synergies take slightly longer to come than just a couple of quarters, but we're extremely, you know, confident that some of that will come in, you know, some of the near future. And that, I think, is the goal for us. We have the balance sheet to continue to look at things. We don't have any must-do M&A, so we can look at, you know, what are what portfolios could fit nicely to our portfolio, and we could bring those additions. So we continue to have a net cash balance sheet. We continue to generate cash flows. which beyond dividend, which of course is planned for Q2, beyond the share buyback program which is underway, gives us the ability to accelerate and allocate capital, whether for M&A, whether for adjacent business model like Riju, if an FID comes, but all of that will be to retain more value and to be accretive to our global portfolio and to continue to grow TPS and our offerings.

Thanks, Bruno.

The last question is from Bertrand Audet, Kepler-Chevreux.

Yes. Hello, everyone. I have two questions. The first one is I wanted to understand a bit more the 100 basis point decrease in EBITDA margin in project delivery. I noted that Bruno used two or three times the absence of milestone in Q1, whereas my understanding is that you were very close to end of Bahrain work, so that may have had an impact, and also as the delivery of the first train in Qatar will have been pushed back. So to make this question shorter, sorry for that, wanted to understand how much is between these 100 basis points a decrease? How much is milestone being pushed beyond 26, and what is the other, which is probably pure cost? And then I will have a second question, but probably this one first.

Bruno will take the first one, and depending on your second one, I may take it.

Hi Bertrand. So on the 100 basis point, of course, first, you have a natural effect. As you decrease your top line, you have your direct gross margin contribution from projects. You have some fixed cost on SG&A. So you have a bit of a natural impact that would come with that. Second, it would be around milestones and incremental costs. that, you know, taking or staying on the Iron Dome metaphor of Arnaud could, you know, be left in our P&L. That's the second part of that. What Arnaud mentioned was, you know, in the assumptions for, you know, Q1, are we closed and are we established guidance? We've absolutely taken a position and a stance where we would not put at risk any measures you know, of the future margin profiles. So this, we've reflected basically assumptions so that, yes, you know, not accelerating the recognition for project or accelerating milestones or expecting for the best. We haven't taken this kind of somewhat bullish or aggressive position and stance to close Q1 and or to provide for 100 basis point kind of adjustments.

Okay. And the second question is, when I look at the current environment and also Trump's mojo of US energy dominance and so on, and also given the location of Canada, I see more and more momentum on Canadian LNG projects, either SLNG or LNG. Are you looking at those opportunities, or are you involved, either on early stage or more mature feed study over there?

Canada and Canada LNG, and you're right to look at this country as an alternative to the U.S. and others. So we are not the incumbent on Canada LNG, as you know, others are. But there are opportunities that we are looking at at the moment, yes, in LNG still. notably on the east coast rather than the west coast that would provide shorter routes to Europe and differentiate the supply so yeah we do have and we are remaining silent about that at this moment but there is an early engagement with alternative LNG project from I would say at a location that is unusual when compared to where the others are. So there is, we have engagement of that nature, yes. And, you know, it seems it's the last question of the call, and thank you for that, Bertrand. I just want to close on some key messages for Tem. What you've heard is that we have a record backlog that is, you know, north of 20 billion. We are financially robust, and the balance sheet and the 10 net cash is demonstrating all that. And yes, the highlight of the first quarter has been very much about the Middle East, and it will continue to be about the Middle East because of the level of exposure that we have that. But we are navigating the situation, and I want to reiterate that we do have a clear strategy and that our strategy is absolutely maintained and confirmed It is about control growth in project delivery, and it is about diversifying away from the Middle East, hence why the recent orders, you know, last year, the year before that, and this year, there's more and more out there of the Middle East. And it is also about enriching TPS. So we have absolutely preserved our ability to deploy capital for growing the technology portfolio or the portfolio of proprietary equipment that will be pertinent for the years ahead. together with going into more of the OPEX, more adjacent business models. So tapping into a source of, I would say, pools of revenues and businesses, which we had kind of left aside for maybe too long for technical energies. And that clear strategy, we're absolutely able to execute. There's a massive distraction, but I can tell you there's a – with the Middle East, but A very strong part of Technip Energies continues to be dedicated and committed to focusing on strategy execution and all that I've described just a moment ago. Thank you for all your questions and for being with us this afternoon.

Thank you, Arnaud, and thank you, everybody. That concludes today's call. Please contact the IR team with any follow-up questions. Thank you, and goodbye.