Vallourec S.A.

Good day and welcome to Valorex 2025 Full Year Results presentation hosted by Philippe Guillemot, Chairman of the Board and Chief Executive Officer, and Nathalie Delbreuve, Chief Financial Officer. For the first part of the conference call, all participants will be in listen-only mode. During the question and answer session, you may ask questions by dialing pound key five on your telephone keypad to enter the queue. And now I would like to hand the call over to Daniel Thompson, Director of Investor Relations. Please go ahead, sir.

Thank you. Good morning, ladies and gentlemen, and thank you for joining us for Valeric's fourth quarter 2025 results presentation. I'm Daniel Thompson, Director of Investor Relations at Valeric. I'm joined today by Valeric's Chairman and Chief Executive Officer, Philippe Guillemot, and Valeric's Chief Financial Officer, Nathalie Dalbroek. Before we begin our presentation, I would like to note that this conference call will be recorded. The replay will be available following the call. You can find the audio webcast on our investor relations website. The presentation slides referred to during this call are also available for download here. Today's call will contain forward-looking statements. Future results may differ materially from statements or projections made on today's call. The forward-looking statements and risk factors that could affect those statements are referenced on slide two of today's presentation. They are also included in our universal registration document filed with the French Financial Markets Regulator, the AMF. This presentation will be followed by a Q&A session. I'll now turn the call over to Philippe Guillemot.

Thank you, Dan. Welcome, ladies and gentlemen, and thank you for joining us to discuss Valouec's fourth quarter and full year 2025 results. You can see today's agenda on slide three. I will move directly to slide five, where I will start by discussing the highlights of 2025. 2025 was another transformative year for Valouec. We progressed several major strategic initiatives and achieved key financial milestones. We continued to drive operational excellence for the organization, including the execution of our cost reduction program in Brazil, completed in Q2 ahead of schedule. We significantly narrowed the profitability gap with our primary peers, demonstrating the effectiveness of our strategy and execution. We stay true to our value-over-volume operating model, securing a new and enhanced long-term agreement with Petrobras, winning major high-value tenders across the Middle East, and driving market share and margin growth in the U.S. through our domestic footprint. We continue to streamline our sources and uses of capital, executing the sale of our non-core CERIMAX welding operations and redeeming 10% of our long-term nodes. Importantly, we also position the company for profitable roles. We successfully acquired and integrated ThermoType do Brasil, adding to our line pipe coating capabilities. These are increasingly serving as a key differentiator in a deep-water project. In the U.S., we broke ground on a $48 million premium threading line investment in Yongsan to increase capacity to thread VAM high-torque connections, which are increasingly used in onshore wells with long laterals. We made further progress on the Phase 2 extension of the mine ahead of expected completion in 2027. As Nathalie will discuss, we built on our growing track record of consistent cash generation with over 400 million euros of total cash generated in 2025 for the third straight year. These improvements in our profitability and financial resilience were recognized with investment-grade credit ratings across all three rating agencies, setting the stage for further optimization of our balance sheet on more favorable terms. Finally, in May, we paid a substantial dividend to shareholders for the first time in a decade, executed a minor buyback and worked to enable our much more significant 2026 share buyback. Let's turn to slide 6 to discuss our results and outlook. In the fourth quarter, we delivered solid results once again with group EBITDA of €214 million above the midpoint of our guidance. This came with a robust 21% margin. We delivered excellent total cash generation of 177 million euros thanks to robust collection and inventory management. In the first quarter, we expect tubes and BDA per ton to remain stable sequentially, while volumes will be below the Q4 2025 level due to slower international bookings in H2 2025. In mine and forest, production soil is expected to be around 1.4 million tons. As a result, we expect Q1 EBITDA to range between 165 and 195 million euros. In the US, our assets remain highly utilized and recent booking activity remains strong. Industry pricing has softened slightly, but we are encouraged by the downward trend in imports and the resilience of our customers' activity. In international markets, commercial activity remains somehow subdued in H2 2025, but in the Middle East we are now seeing clear signs of acceleration, especially in markets with higher levels of unconventional activity. We see potential for activity to increase in the second semester and beyond as the oil market rebalances gas-related activity increases, and our customers face accelerating decline rates. Turning to capital allocation, we are making good progress with our €200 million buyback announced in January, with €150 million remaining under the current program. We have purchased 3 million shares year-to-date. Now, let me provide you with an update on 2026 shareholder return on slide 7. Today, I am pleased to announce ValuWax's expectation to propose, in addition to the €200 million share buyback, an interim dividend of approximately €450 million to be distributed in the third quarter this year. This would take the total return to shareholders to approximately 650 million euros between January and August 2026, representing a year-on-year increase of around 280 million euros. This distribution represents approximately 90% of our 2025 total cash generation, and 100% of the proceeds of the warrants, which are expected to be exercised before the end of June. We have adopted a balanced distribution framework, limiting warrants dilution through buybacks, growing our dividend, and maintaining a defensive balance sheet. Based on our current share price, this distribution represents a potential interim dividend of €1.75 per share, including the anticipated deduction from the exercise of warrants. This is a healthy increase of 25 cents compared to last year's €1.50 per share. Turning to slide 8. We show the usual comparison versus our primary public peer. The trend is clearly positive over the past year, and we remain focused on eliminating the gap entirely. We continue to outperform in terms of return on capital, which is a key focus of our medium-term roadmap. And on that note, let's turn to slide 10 for an update on our strategic priorities. We have made substantial efforts to streamline our core asset base over the past several years, but there is still work to be done. Our key strategic priorities in 2026 are directed at unlocking this potential. First, we will continue to drive operational excellence throughout the Group. This is not a passive process. We are actively implementing a new management system which is firmly results-driven and embedded in daily operations across all business functions. Bertrand Frischmann, our Chief Operations Officer, is responsible for its implementation. We look forward to sharing more about this program with you in the coming months. Secondly, we will continue to optimize our asset base to drive improved return on capital. And third, we are actively investing to position ourselves for profitable growth. Let me talk about a few examples on these later two initiatives now. Let's turn to slide 11. Here you can see the targeted set of high return projects we have executed since the launch of the new value-add plan in 2022. You will recall we began with a major downsizing of our rolling capacity in Germany and right sizing in China and ultimately Brazil. We made the strategic decision to close loss-making capacities and exit low margin business. More recently, our focus has turned to the upstream and downstream elements of our value chain and is more about enabling profitable growth than shrinking our assets. In our upstream process, we have invested to expand capacity for high-quality iron ore production at our mine in Basile. Production from the Phase 1 extension started at the end of 2024. We are now working on Phase 2. with completion still scheduled for some time in 2027. We are now undertaking projects to reconfigure our steelmaking assets in Brazil to reuse complexity and maximize operational flexibility, including the ability to run our steelmaking operations without the use of our blast furnace. In our downstream operations, we are investing heavily in our trailing and coating capabilities, where technology barriers and returns on capital are higher. We are adding to our trailing line capabilities in the US, adding both large diameter and high torque capabilities. Meanwhile, we see significant opportunities in advanced coating solutions, and we'll be investing in both Line 5 and OCG coating line this year. All of these projects will be executed within our expected capex envelope of 150 to 200 million euros on top of significantly increased spending on safety initiatives as laid out in our capital allocation framework. Let's turn to slide 12. to discuss one way in which we are positioning for profitable growth. At our Capital Market Day in 2023, we highlighted our favorable positioning in the conventional geothermal market and the upside that could materialize in more advanced technologies. We are now seeing clear signs that these next generation technologies are moving towards widespread adoption. The momentum is driven by rising demand for low-carbon, baseload, and dispatchable power, with AI hyperscalers investing heavily to secure supply. The IEA has recently highlighted a five-fold surge in next-generation geothermal financing over the past three years to $2.2 billion in 2025. The increase in financing has been underpinned by rapid technological progress, much of which relates to learnings from the Shell industry. With drillings and well costs representing up to 80% of total costs, significant improvements in drilling speeds are dramatically improving geothermal project economics. You can see the high potential of this market in the chart on the right, which comes on top of expected growth in conventional geothermal. We are already experiencing a significant increase in our geothermal bookings as our customers begin to execute on development pipelines that are orders of magnitude above today's installed capacity. We are uniquely positioned to benefit from this growth thanks to our domestic footprint in the two largest markets for geothermal today, the US and Indonesia. Our cutting-edge research and development expertise has allowed us to continuously improve our product offering to meet the high demands of geothermal wells placed on tubular products. And we can pair these products with our world-class service offerings. Let's look more closely at the next generation geothermal opportunity. I am on slide 13. You can see the elements that differentiate traditional geothermal from next generation applications. On the left, you have conventional geothermal, which has seen steady growth over time, but is restricted by the requirements for hot water reservoirs and sufficient subsurface permeability. In the middle, Enhanced geothermal mitigates the permeability constraint by using shell-like technology to add subsurface structures into deeper conventional geothermal systems. In closed loops or advanced geothermal, the only requirement is hot rock, with no need for an external water source or permeable rock. Naturally, this opens up the resource potential exponentially. Turning to slide 14, you can see the typical characteristics for each geothermal development type. Much like the oil and gas industry used rapidly advancing technology to tap into unconventional and ultra deep water fields in the early 2000s, the geothermal industry is pushing technological boundaries that open new markets. Valourec is ideally positioned from its expertise in shell developments to serve energy and thermal markets. Similarly, our unique vacuum insulated tubing solution is ideal for closed loop systems. This is not a fantasy. We are already serving customers across all of these product categories. Clearly, Though, the growth potential in next-generation solutions coupled with VALUX's higher revenue opportunity per MW makes the growth in advanced and enhanced applications quite compelling. As you may have seen, in January, we announced an exclusive partnership with XGS Energy to support their delivery of a 3GW pipeline of commercial advanced zero-thermal projects across the Western US. We hope this will be the first of many such fruitful relationships in this industry. Now, let's turn to our usual discussion on the OCTG market. I am on slide 16, where we focus on the U.S. market. On the demand front, the horizontal oil recount has been stable since mid-2025. Gas-directed draining activity has increased for 2025 and into 2026. A wave of LNG product startups and growing domestic gas demand is supporting market expectations. Trigs draining for gas now account for a quarter of the total count, up from 17% a year ago. Looking at the supply side, imports continue to decline for the fourth quarter following the administration's increase in Section 232 steel tariffs in June. Notably, we can see from the chart that the tariffs have been more effective in curbing seamless imports compared to welded imports. On the right, SIMLET spot pricing has moderated slightly since the third quarter, though prices increased in both January and February alongside improving sentiment. Overall, we are encouraged by the improving supply-side dynamics and the resilience of our customers' activities. Let's move to the international OCTG market on slide 17. Demand remains stable in international markets but was somewhat subdued in 2025 compared to the beginning of 2024. We saw slower tender activity in the second half of 2025 that will cause us to start 2026 at a slower shipment cadence. In most of our core regions in the Middle East, Africa and Latin America, we have continued to perform well, in part due to our strong positions in high-value markets like unconventional gas and deep water. Looking ahead in the Middle East, we are seeing some signs of an activity acceleration, especially in markets with higher levels of unconventional activity for which we are supporting customers today with our high top premium connections. Our premium portfolio often allows us to outperform the price indicators we show on the right side of this slide. That said, the latest outlook from ISTAC does show an improvement in market pricing in January. I confirm that our average booking prices for international markets have remained at healthy levels due to our ongoing focus on value over volume. I will now hand the call over to Nathalie to comment on our financial results.

Thank you Philippe and good morning everyone. So let me now lead you through our key figures and results for Q4 and the full year 2025. So let's turn to slide 19 to discuss our full year results and the key figures. As you can see, tube volumes were 1,244 kilotons for the full year 2025, so down slightly year over year, with lower tubes volumes in South America and Easter's Hemisphere, not fully offset by stronger volumes in the US. The full year EBDA was €819 million versus €832 million for the full year 2024. This slight decline includes a significant adverse foreign exchange impact of 47 million euros. Tubes volume decline was more than offset by positive price mix effect in tubes, stronger contribution from mine forests and continued cost reduction initiatives maintaining a strong 21% margin. Net income was €355 million versus €452 million in 2024. Let's remember that 2024 was impacted by positive one-offs with the sale of the RAT site in Germany generating a gain of sale of €139 million and with our refinancing last year. Overall, we continue to build on our track record of generating consistent net income. Net cash ended the year at 39 million euros, slightly higher than end of 2024 and after 370 million euros having been returned to shareholders. So moving to slide 20, we can see that we continue to build on our track record in Q4. It has now been 13 quarters that the EBITDA margin has been around 20%, showing the strong resilience of the group, its ability to adjust costs and maintain a strong margin. Since 2022, we have been reducing our working capital requirements in number of days, as you can see on the top right. In Q4 2025, we further improved our working capital requirements with robust collections and inventory management. You can see on the bottom left that we have a track record of healthy positive total cash generation with 177 million euros total cash generated in Q4 2025. which leads to positive cash at the end of the year, as you can see on the right. Let's turn now to slide 21 to start discussing our Q4 results and key figures. So revenues were 1 billion 43 million euro, down 2% year over year, but again impacted by negative currency effect of minus 6%. So revenues at constant foreign exchange rate are up 4%. Reduction in volume sold were more than offset by improvement in price mix and minor positive effect in mine and forest. EBITDA was 214 million euros of 20.5% of revenues, stable compared to Q4 2024. Foreign exchange impact quarter over quarter is negative by 10 million euros. So like for the full year, the positive price mix effect in tubes across all regions, as well as lower costs and cost savings, did offset the impact of lower volumes, which I will comment in the next slide. Adjusted free cash flow in Q4 2025 was €204 million to be compared to €178 million in Q4 2024, which I will comment in more details later. And this led, as we saw, to a net cash position. It's €39 million achieved at the year-end. We will now look at Q performance in Q4 on slide 22 and also 23. So looking at volumes, page 22, you can see that volumes were stronger quarter over quarter, as we guided. They were lower year over year, mainly due to our US import business in the Gulf of America, as expected, and certain regions in Eastern Hemisphere. Average selling price was higher year over year, as NYX shifted more to international in Q4. Overall, Q4 tube's revenue was 2% higher year over year, and even 8% higher at constant foreign exchange rate. Revenue mix by geography that you see in the bottom left shows a reduction in North America contribution due to the decrease in imports versus Q4 2024, but also to a strong contribution from Middle East. Slide 23, we can see the TUBE's profitability. So TUBE's EBITDA was €183 million and 18% of revenue. So as you can see, our margin is very stable and resilient. Tube CBD per tonne at €548, increased by €37 per tonne year over year, and even €65 if you consider constant foreign exchange rate confirming, again, the positive impact of our value over volume strategy. The decrease versus Q3 2024 EBDA per tonne is due to a less favourable need this quarter and a lower proportion of services. So let's move now and look at the mine and forest performance on slide 24. The production sold in Q4-25 was close to 1.5 million tonnes, outperforming our expectations voiced during our Q3 call, leading to a full year volume of 6.2 million tonnes. Mindforest EVDA, as you can see on the right bottom, reached 38 million euros and 48% of total revenue, increasing sequentially by 10%. This reflects higher iron ore market prices, partially offset by seasonally lower volumes. For the full year, EBITDA reached €171 million, up significantly year over year, reflecting higher quality in ore after the start-up of the Phase 1 extension in late 2024. So let's look now on slide 25 at our net income key drivers and evolution. We continue to deliver a solid bottom line as you can see on the right. In Q4, net income was 96 million euros, that is 9% of total revenue, net income group share. You can see that Q4 2024 net result was higher at 163 million euros. Again, as already explained, in 2024, the group net results had benefited from the one-off book gain on sale of the RAT site in Germany for 139 million euros. Looking on the left at Q4, you can see that, and the bridge from EBITDA to net income group share, you can see that depreciation and amortization amount to minus 52 million, very much in line with previous quarters and Q4. Financial result is minus 16 million euros. In the other pillar of the bridge includes restructuring and someone of impact, such as in the quarter, the positive reversal of impairment of assets in China for plus 38 million euro, reflecting the good operational performance and evolution of China. Income tax is minus 35 million euro. Effective tax rate was 26% in Q4 2025. Let's look now at cash flow analysis on slide 26. We can see how we convert EBDA into cash flow for the quarter and for the full year. We had excellent total cash generation in Q4 of 177 million euros, resulting in over 80% conversion of EBITDA to cash, thanks to robust collection and inventory management, driving the change in working capital that you see on the left. CAPEX was minus €55 million, a bit elevated versus prior quarters, as war continues on our growth project. And as you can see on the right, we did remain within the €150 to €200 million range as disclosed in our CMD in the full year 2025, with total capex for the year of 176 million euros. So for the full year 2025, we delivered over 400 million euros of total cash generation for the third straight year, with restructuring costs halving year over year and continued structural improvement in our working capital as we optimize our operations. And in the last slide, let's look at our debt and liquidity. So thanks to the excellent net cash generation I just commented, we turned net cash positive in Q4 with plus 39 million euros on the balance sheet of cash, on the balance sheet at the end of the year. As you can see on the right, we have significant liquidity above 1.6 billion euros, of which nearly 1 billion euros in cash.

Thank you, Nathalie. Let's come to slide 29 to discuss our outlook. Starting with our two businesses, in the first quarter, we expect volumes to decrease sequentially. Immediate returns should remain similar to the fourth quarter level. For the full year, we expect our North America tube business to see sustained trends in volume thanks to market share gains during 2025. We expect a slight near-term decrease in U.S. market prices with improving industry supply demand conditions setting the stage for potential improvement later in the year. In our internal tubes business, we expect lower sales volume in H1 2026 due to slower booking in H2 2025. We see activity recovery in the key Middle Eastern markets, setting the stage for higher second half volumes. We expect market pricing to remain broadly stable versus the second half of 2025 with discrete customer contracts driving selective price upside. For Midland Forest, we expect production flow to be around 1.4 million tonnes in the first quarter. We expect full-year production of around 5.5 million tonnes slightly lower year over year due to an improved production process focusing on value over volume. At the group level, we expect our first quarter EBITDA to range between 165 and 195 million euros. Let's conclude on slide 30. We are driving further improvements in return on capital through a relentless push towards operational excellence and asset streamlining. We are positioning for future profitable growth through targeted research and development and capital investments to solve the energy challenges of today and tomorrow. Finally, we are delivering on our commitments to shareholders, targeting a substantial 650 million euros in shareholder returns in the first eight months of 2026, while maintaining our crisis-proof balance sheet. Thank you again for your attention. Nathalie and I are now ready to take your questions.

If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. We have a question from Paul Redman from BNP Paribas. Please go ahead.

Hi, guys. Thank you very much for your time. I just want to ask two questions. Firstly, what's about the Bive app and distributions? You've guided 650 million euros of payouts shareholder in 2026. I just want to ask about the allocation and why you've allocated the, well, additional cash to dividend rather than to buyback to kind of offset some of the dilution impact of the warrants in 2026. And then my second question was on working capital. You've had a big release this quarter. I want to go into a little bit more detail on what the drives of that is. and also how do we think about working capital in 2026. Thank you very much.

Okay, first I will take your first question. As you know, we have launched a share buyback plan for 200 million euros to be executed by end of June. But given the daily volume credits and obviously how we can execute share buyback, I think we were a bit capped And that's why we only allocated 200 million euros out of the 650 to share buyback, remaining being, as you have seen, the sum of the proceeds of the share buyback of the warrants and what was not used for the share buyback from the total cash generation of 25. Second, the return on capital employed and working cap. You clearly understood that since I joined, my main focus was on delivering the balance sheet of Valourec, and we reached the zero net debt end of 2024. And again, end of 2025, we have a positive net cash of €39 million. But the levers we have used to achieve such performance was obviously to work on every aspect of our capital employees, starting with the working cap. And by the way, there is a nice slide in Nathalie's presentation where you can see that our working cap in days of sales continued to decrease, and we still see further room for further improvement. And on our asset base, as I have mentioned in my presentation, we continue to question and challenge any asset we have in Valorec, which is not absolutely needed to generate, obviously, the performance we are contemplating.

Great. Thank you very much.

We have a question from Max Smith from Bofa. Please go ahead.

Hi there. Good morning. Thanks for taking my questions. I wanted to start on the mine, if I could. You talked to a new strategy, sort of value over volume there. I wondered if you could give us any update in terms of where, you know, you might put new guidance perhaps for annual EBITDA for that business versus what you've presented in the past. You know, what is it? What is the net of that strategy? And I suppose a follow-up would be, does that have any implications for future mine expansion plans that you've talked to before, please? That'll be the first one. And then the second one would be, thank you for the updates as ever around the US sort of OCDG market. We can see those seamless imports coming down. I think the one sort of topic that scratched my head out a bit is domestic supply in the US. It was actually a source of a lot of supply growth in 2025, which doesn't seem to get much airtime. And I just wondered if you could talk to the drivers of increased supply, domestic production in 2025. And if you saw the picture any differently for 2026, your insights there would be really appreciated.

Thank you. Okay, thank you. So let's start with the mine. First, we are very consistent with what we said in September 2023 about what we expect from the mine. You remember Phase 1, now fully executed, around €100 million. Phase 2, completed, €125 million. So there is no deviation versus what we said in 2023. What has changed in the meantime, is that we have applied our recipe for success, value over volume, to the mine too. So today we extract less rum, but we are able to produce more iron ore, more high-quality iron ore, and this is the ABDA we are looking for. So that's the logic behind this. So again, I insist, no change versus what we said in September 23 about what we expect from the mine. As far as the OCTG US market is concerned, first imports have declined since the implementation of the 2.32 import tariff, which obviously led customers to buy more from domestic capacity. First effect is a better use of existing domestic capacities, starting with ours. And as I said, we have nice volumes and we are well loaded with our capacity. On top, what we see is a better sentiment. And as you have seen, Pipelogic, Slicing Oligo, Injan, Infeb again, which obviously gives us confidence that at some point, the balance between supply and demand will translate into upward pressure on prices. And this is likely to obviously happen in 26. On top, as we mentioned, we have invested in additional capacity to produce high torque connection for unconventional drilling. that's a change in the market and the market is becoming more premium as uh as you have seen our customers are able to produce as much oil with less rigs less wealth uh thanks to this technology obviously there is real appetite for this technology that we have developed and for which we have gained market share and obviously we intend to continue to gain market share All right, thank you.

Appreciate all the color. I'll hand it off.

As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. We have a question from Kevin Roger from . Please go ahead.

Yes, good morning. Thanks for taking the questions. I have two if I may. The first one is maybe to understand a bit more the Q1 guidance because at the time of the Q3 earnings, we were mentioning some shift in volumes from Q4 25 to H1 26. So I was wondering if the lower volumes that you mentioned for Q1 means that those volumes have been shifting to Q2 and maybe to understand a bit more, you know, the implication that we saw between the two quarters. And the second one, you talked about the geothermal activities during the presentation quite a lot, and recently you signed a deal with XGS. When we make some maps with the elements that you shared with us, this framework agreement could represent quite a lot of revenue, maybe something like 1.5 billion. So I was wondering if you can share a bit with us how you do see this XGS partnership impacting the revenue for VALUREX in 26, 7, and 8, please.

Yeah, going back to Q1 volume being lower than Q4, I remind you that our volume in Q4 were much higher than Q3. So, obviously, this has to be put in perspective. When oil price started to go down, we have seen last year in H2 customers not canceling investment plans, but taking more time to decide on their investment and placing orders. And that's what's reflected in our bookings and we translate in H1 in our invoicing. But again, as I said, we see clear pickup since the beginning of the year as, by the way, oil price went up $10 since. uh so that's why i think the profile of this year volume wise is likely to be similar to the one of 25. yes thank you for noticing uh obviously to bouncing back on what we said on geothermal it's a new market which is opening and again three years ago uh obviously we we we had We decided to obviously invest time and money on research and development on new applications for our know-how. And this geothermal enhanced and advanced technology was the right bet. And yes, today, and thanks to the data centers, which are popping everywhere, and the huge need for baseload electricity, This technology now has obviously a good, good, good, good prospect. And as I said, there is more project in the pipeline than the existing install base. And we are positioned on it. We mentioned about XGS, for which we provide unique technology with. We are the only one able to provide the famous DIT technology, vacuum insulated tubes. And when you do the math, yes, I think your conclusion is the right one. I think this wealth, because geothermal is based on wealth, requires technologies, premium technology we have, and obviously this will come on top of our technologies to support our customers on unconventional, more gas-directed production.

But sorry, if I may follow up, how would you, in a way, see the phasing? Would you consider that, you know, those opportunities will mostly materialize in 28 because those guys need to get a lot of financing, or you do see already a lot of stuff in 27, for example, or even sooner?

Data centers need electricity now and in the next year, so there is no time to wait. And the geothermal project can be executed as fast as it can drill. So it's already today. And obviously it will ramp up nicely over the next years, but it's not something for the future. It's already something for projects which are currently in execution phase.

Okay. Thanks a lot.

As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. We have a question from from . Please go ahead.

Hi. Yes. Good morning, everybody. Two questions from my side. First one is if I look at your slide, page 11, I see you still have, let's say, a quite tense investment program for 2026. Does it mean that in terms of GAPEX, we should be in the upper range of your, let's say, GAPEX guidance that you gave in 2025? And second question, on the geothermal market versus hydrogen market, it seems that you are more bullish right now on geothermal than, let's say, on hydrogen market. What is your view on the hydrogen market? Is it, let's say, the next wave after geothermal in terms of sequence for you? Thanks a lot.

Yeah, as far as CapEx is concerned, yeah, we gave you on page 11 a sense of what we have been doing since 2022. Many projects, obviously, are in execution phase in 26, but nevertheless, we will be within the envelope we shared with you, between 150 to 200. So no risk to go beyond what we said. So we stay, obviously, very disciplined in our capital allocation. The good news is that obviously the return on investment of all these projects is fairly consistent with our will to increase over time our return on capital employee. As far as hydrogen and geothermal is concerned, it's true that three years ago nobody was talking about GNI. Nobody was talking about data centers, hyperscale. Today that's a fact. There is a lot of investment, there is need for bezoar electricity, and geothermal is one of the solutions to provide these huge quantities of bezoar electricity. So it's clear that it's come now faster than hydrogen and green hydrogen. Nevertheless, on green hydrogen, we are in talks with many customers, whose projects are in the FEED phase, so engineering phase, which sooner or later will reach the FID stage, investment decision stage. So that's something to come, that will come on top. And as you remember, our Delphi storage solution is the only one available today to store between 1 and 100 tons of hydrogen. So more to come. And as you remember, we've decided to manage this business as a turnkey business, so obviously it could be a nice addition to our revenue and profitability in the future, and it's fully part of our five-year plan.

Thank you very much.

Now we have a question from Julian Thomas from TPICAP. Please go ahead.

Thank you for taking my question. I have two, please. The first one would be about maybe your take on your German partners' agreements regarding HKMJVs. Do you have something to share with us or something like that? And the second question about your improvement in EBITDA pattern. Could you give us what can come from those three investments versus, let's say, historical restructuring of existing capacities? Thank you.

Well, first on HKM, yeah, the agreement between ThyssenKrupp and Seltzer opened the door for us, as ThyssenKrupp will do, to sell our shares to Seltzer and terminate our shareholding of HKM. Obviously, there will be, we have to provision for all the work that we have to do when they will be. But this is fully already covered by our balance sheet provisions. So I think we are, I think it's for us, it's a good news. I think Decent Group and CellDicta have reached this agreement and that now we can execute this transaction. As far as the EBITDA pattern is concerned, you know, EBITDA is a result of, obviously, average selling price, which is driven by our value over volume strategy. You remember, when I joined Valoureg, volume were 1.850 million tonnes. We are now a slight above 1.2, so drastic change with the past, but average selling price has a significant increase. And a BDA pattern is a consequence of cost. And we have worked a lot in the last years and we continue to do so to continue to lower our cost structure and ensure it's a very highly flexible industrial footprint. So whatever the volume, we protect our margin thanks to our ability to flex cost whenever we need it to adapt to the sequence of bookings and the cycle of this industry. So that's why we have been able to close the gap with our primary peer on EBITDA pattern. And you've seen the data on the slide showed earlier. And we will obviously continue to do so and we have projects in order to continue to improve on that front.

Thank you very much.

We have a question from Mike Pickup from Barclays Capital. Please go ahead.

Hello. It's from Barclays. Just a quick one. You talk about the international business improving in the second half. Is there anything Is it significant that we should be keeping an eye on something like the big Kuwait orders or is it just a general take-up across the regions?

Well, first two things. One, when Barrier of Brent is going up US$10, it's clear that there is an incentive for our customers to go a bit faster on executing their plans. Second, what we see in Tunisia, there are major unconventional oil field openings, which require many wells using our technologies, starting with ITOP. So that's something which seems to pick up significantly since the beginning of the year. And we may communicate more widely in the future. Thank you.

We have a question from Paul Redman from BNP Paribas. Please go ahead.

Hi, guys. Am I able to ask one more? Yeah, please. I just wanted to touch on Venezuela quickly. One of your peers spoke in length about opportunity in Venezuela. I kind of want to ask about your position in the country and whether this is a market you think you'll be able to sell volumes into in the relatively near future. Thank you.

So we used to sell to Venezuela years ago. What has changed in the meantime is now, thanks to all the investment we did in Brazil, we are able to make the five which are needed for Venezuela in Brazil. So obviously much closer than it was in the past coming from Germany. You know, the onshore oil fields in Brazil are sour, so you need sour service pipes, which we make and which are obviously very premium pipes. So from a product standpoint, I think we are uniquely positioned. And on top, as you know, given our strong presence in the U.S., we are the number two player onshore business in the U.S., we have close relationship with the U.S. customers. So today we have a task force, which is a mix of our U.S. sales team and Brazilian production team in order to save any opportunities that may come in Venezuela. So more to come. will depend obviously how fast our customer go forward with their project.

Great, thank you.

We have a question from Jean-Luc Romain from CIC CIB. Please go ahead.

Good morning. My question also relates to geothermal. You mentioned rightfully that the product you will deliver is very specific with kind of piping pipe or so. What's the limiting, do you have a limiting factor which would be the capacity to produce those pipes in terms of your growth in incase or do you have a strong capacity to do this?

We have available capacity. VIT is a process in itself because we need to weld one pipe inside another pipe, so that's a specific industrial setup that we have, and for which we have capacity available. So no, obviously, it's clear that if we double our volume thanks to this new market, at some point we will reach our capacity limit, but it's not yet the case. And anyway, it's good to know that to be on more than one market, and obviously to mitigate any up-and-downs on any other, any market that is the one ignoring that.

Understood. And from what you said, the EBITDA associated to the growth in geothermal would rapidly become in the tens of millions, or could it be maybe at a later stage in the hundreds of millions?

You know, in 2022, I said that we were expecting between, maybe in 2023, that we were expecting between 10% and 15% of our group EBITDA coming from these new energy applications. So it's fully part of it. It's fully part of it. And obviously, we are very strict with our value over volume strategy, and I can guarantee you that it will not be dilutive to our EBITDA patterns.

Thank you very much.

There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.

Thank you. Thank you all. I'm very pleased to be in the position we are today. Bellwack is a fully transformed company, evidenced clearly by our investment-grade balance sheet and the robust returns we are delivering to our shoulders again in 2026. Meanwhile we continue to see opportunities as we drive operational excellence across our organization and position for profitable growth. We are well positioned to serve the energy challenges of today and tomorrow. Operator, you may end the call.