Earnings call: Technip Energies posts robust growth, upgrades guidance

Technip (EPA:FTI) Energies (TE) has reported a strong financial performance for the first nine months of 2024, with a 13% increase in year-on-year revenue, reaching €5 billion. This growth was primarily driven by significant project ramp-ups and a solid performance in the Technology and Projects Solutions (TPS) segment. With an upgraded full-year revenue guidance of €6.5 billion to €6.8 billion, the company expects to maintain double-digit growth. Earnings per share (EPS) have risen by 35%, and net profit has increased to €280 million. These results highlight Technip Energies' operational success and strategic positioning in the market.

Key Takeaways

• Technip Energies achieved a 13% year-on-year revenue growth to €5 billion in the first nine months of 2024.
• The company upgraded its full-year revenue guidance to €6.5 billion to €6.8 billion, indicating strong performance.
• Earnings per share (EPS) rose by 35%, with net profit reaching €280 million.
• Operational highlights include progress on LNG projects in Qatar and securing major contracts in the U.S. and India.
• The backlog increased by 2% to €14.2 billion, and free cash flow was reported at €360 million.
• The company returned over €170 million to shareholders through dividends and share buybacks in 2024.
• CEO Arnaud Pieton expressed optimism for the LNG market and the company's growth prospects.

Company Outlook

• Technip Energies anticipates strong order intake in Q4, with orders expected to exceed revenues for the second consecutive year.
• The company confirms a margin guidance of 7% to 7.5%.
• Effective tax rate guidance is adjusted to 29% to 33% for 2024, reflecting potential surtax implications.
• Technip Energies is preparing for its Capital Markets Day on November 21 to discuss strategic objectives for 2025.

Bearish Highlights

• The company noted a recent slowdown in order intake, though a rebound is expected in Q4.
• Non-recurring costs related to new business ventures, particularly in PET recycling, are projected to remain high in Q4.

Bullish Highlights

• CEO Pieton projects a need for 800 million tonnes of LNG supply by 2030, with Technip Energies involved in significant projects.
• The company is confident in operational execution and future growth prospects, with strategic investments in decarbonization and gas projects.

Misses

• Despite a positive outlook, there are uncertainties such as the Coral Norte project possibly slipping into 2025.

Q&A Highlights

• Technip Energies is managing project costs amidst inflation by incorporating a 3% to 4% annual inflation buffer into project pricing.
• The company is expanding its workforce, particularly in process technology and molecule transformation, to meet high industry demand.
• Technip Energies is preparing for multiple fabrication plans to mitigate risks associated with tariffs and geopolitical issues.

Technip Energies' operational achievements and financial results underscore its resilience and adaptability in a dynamic market. With a focus on proprietary products and technology, particularly in carbon capture and blue hydrogen initiatives, the company is well-positioned to capitalize on emerging industry trends. The upcoming Capital Markets Day will provide further insights into the company's long-term strategy and financial health, as investors and stakeholders look forward to understanding Technip Energies' roadmap for 2025 and beyond.

InvestingPro Insights

Technip Energies' strong financial performance in 2024 is further supported by data from InvestingPro. The company's market capitalization stands at $4.34 billion, reflecting its significant presence in the energy sector. With a P/E ratio of 10.3, Technip Energies appears to be trading at an attractive valuation relative to its earnings, which aligns with the company's reported 35% increase in EPS.

InvestingPro Tips highlight that Technip Energies holds more cash than debt on its balance sheet, a positive indicator of financial health that complements the company's reported free cash flow of €360 million. This strong cash position supports the company's ability to return value to shareholders, as evidenced by the over €170 million distributed through dividends and share buybacks in 2024.

The company's dividend strategy is noteworthy, with InvestingPro data showing a dividend yield of 1.77% and a history of raising dividends for three consecutive years. This consistent dividend growth underscores Technip Energies' commitment to shareholder returns, even as it invests in future growth opportunities.

Technip Energies' revenue growth of 5.37% over the last twelve months, as reported by InvestingPro, aligns with the company's upgraded full-year revenue guidance and expectations for continued double-digit growth. The operating income margin of 7.38% is consistent with the company's confirmed margin guidance of 7% to 7.5% for 2024.

Investors looking for a deeper dive into Technip Energies' financials and growth prospects can access additional insights through InvestingPro, which offers over 10 more tips for this stock.

Full transcript - Technip Energies NV ADR (THNPY) Q3 2024:

Phil Lindsay (NYSE:LNN): Hello, and welcome to Technip Energies’ Financial Results for the First Nine Months of 2024. On the call today, our CEO, Arnaud Pieton, will provide an overview of our nine month performance and business highlights. This will be followed by our CFO, Bruno Vibert, who will share more details on our financial results. Then Arnaud will come back to conclude. We’ll then open for questions. Before we start, I would encourage you to take note that the forward-looking statements on Slide 2. I will now pass the call over to Arnaud.

Arnaud Pieton: Thank you, Phil, and welcome everyone to our results presentation for the first nine months of 2024 through which we have made tremendous progress in executing our business plan. Let me take you through some of the key highlights of our performance. We delivered robust revenue growth of 13% year-on-year, a testament to our backlog evolution, strategic initiatives and market positioning. Volumes were notably strong in Project Delivery, as large projects ramp-up, whereas TPS revenues are running at an annualized rate of around €2 billion. As a result, we are upgrading our 2024 revenue guidance by 5% at the midpoint to a new range of €6.5 billion to €6.8 billion. This new range implies that full year revenues will grow at a double-digit rate in 2024 and with a momentum expected to continue in 2025. EPS grew by 35%, benefiting from strength in revenues, higher financial income, as well as the absence of material one-off factors that impacted last year. Commercially, we secured our position on notable projects that enable diversification and will serve to populate our backlog in 2025 and beyond. This includes our selection for a major LNG export terminal in the US, an important blue hydrogen feed in the UK and a green ammonia award for our Rely joint venture. I will provide more color on this later. Finally, with the completion of our share buyback program and planned cancellation of treasury shares, T.EN will have returned more than €170 million in cash to shareholders during 2024, through dividends and buybacks, equivalent to roughly 4.5% of our market cap and underlining our commitment to shareholder returns. Moving to operational highlights for the third quarter, where we continue to execute well across our portfolio of projects and TPS, as evidenced by our solid EBIT margins. In Qatar, both LNG projects, NFE and NFS are progressing per plan. Notably, NFE has progressed towards peak mobilization with close to 45,000 workers at site. This activity will plateau at this high level through 2025. In ethylene, a market where we enjoy clear leadership, we passed final performance acceptance test at Long Sơn in Vietnam, a project which integrates many of our proprietary licensed ethylene technologies. Turning to TPS highlights. Reju, our textile-to-textile recycling company, opened its first commercial scale demonstration plant in Frankfurt, Germany. We completed the FEED for the Arcadia eFuels project to utilize CO2 to produce sustainable aviation fuel. And the LaBarge Carbon Capture project in the US continues to make good progress. These three FEEDs; carbon capture, sustainable aviation fuel and plastic circularity through Reju will feature as breakout sessions for in-person attendees at our upcoming Capital Markets Day. Overall, I am very pleased with our solid first nine months and I am sincerely grateful to our teams for their continued dedication and professionalism. Turning to commercial and other strategic highlights. With a book-to-bill of around one, our order intake year-to-date is tracking in line with our revenue. On a full year basis, we are very confident that orders will exceed revenue, notably due to awards likely to be booked in Q4 including one for the delivery of large modules for a major offshore project in the Americas. We also recently secured an important award for our green hydrogen and Power-to-X joint venture Rely to provide services for one of the world's largest green ammonia plant for AM Green in India. In the third quarter specifically, we celebrated the technology first, with an award for our proprietary low-emission cracking ethylene furnace for CPChem in the US. This award showcases our ability to develop scale and commercialize technologies that assist in the decarbonization of hard-to-abate sectors. In addition, we secured our position on notable projects that enable diversification and would serve to populate our backlog in 2025 and beyond. This includes our selection by Lake Charles LNG for a major export terminal as well as a front-end engineering design or FEED award for Rovuma LNG in Mozambique. Both highlight our continued leadership in modularized LNG trains. In addition, BP (NYSE:BP) awarded T.EN, a FEED for its H2Teesside project, which is expected to be one of the UK's largest low-carbon hydrogen production facilities fully integrated with the carbon capture technology. This reinforces our position in the UK's first decarbonized industrial cluster, where we have also been selected for the Net Zero Teesside power carbon capture project, pending final investment decision. Our strategic focus and competitive edge in these areas really position us well for future successes and sustained growth. Finally, as part of our strategy to enhance workforce capabilities, this week we announced a small bolt-on acquisition of process engineering businesses in Italy. Bringing a talent pool of 70 people, the deal strengthens our early engagement and TPS activities across core and energy transition markets. I will now hand over to Bruno to present the financial highlights.

Bruno Vibert: Thanks, Arnaud, and good afternoon everyone. I'll begin with the highlights of our financial performance for the first nine months of the year. Revenues were 13% higher year-over-year at €5 billion, benefiting from the ramp-up of major projects, as well as a steady growth in TPS, which delivered its highest ever quarterly revenue performance in Q3. With stable margins, recurring EBIT increased by 12% year-over-year to €357 million. Net profit is very strong, up 35% year-over-year to €280 million, benefiting from the operational performance, growth in net financial income and the absence of one-off factors that impacted 2023. Turning to orders. Adjusted order intake was €4.8 billion in the first nine months, broadly keeping track with revenues. As Arnaud mentioned earlier, our book-to-bill ratio is set to exceed one on a full year basis. Free cash flow, excluding working capital and provision was solid at €360 million. And closing gross cash was €3.5 billion, essentially in line with the year-end position. So in summary, we've delivered a strong performance across key metrics for the first nine months of 2024. Turning to our segment reporting, starting with Project Delivery. Revenues are up significantly with growth of 17% year-over-year to €3.5 billion, as activity ramps up on the major NFS project in Qatar, while on-site construction activity on NFE is plateauing at peak levels with good progress being made. Turning to profitability, where this quarter for the first time, we are disclosing segment recurring EBITDA in order to provide the financial community with more granularity of our business performance and enable better comparisons in the market. For Project Delivery, EBITDA margins for the first nine months are around 100 basis points above EBIT margins. This is a sensible proxy to consider for modeling moving forward. Assessing the performance year-to-date, EBITDA margins were 50 basis points lower year-over-year at 8.3%. Execution across the portfolio is consistently strong with the differentiation versus last year explained by portfolio rebalancing and higher volumes from earlier phase projects, where less margin is recognized. Benefiting from the revenue growth, EBITDA in absolute terms increased double-digits year-over-year. The trends for recurring EBIT are absolutely consistent with EBITDA. Finally, the backlog has grown by 2% since the beginning of the year to €14.2 billion, equivalent to 3.5 times 2023 segment revenues and providing excellent visibility. Given the strength of our commercial outlook for the next 12 to 18 months, we are confident that we will reinforce this backlog with high-quality projects and this supports T.EN's very positive trajectory. Turning to TPS where business momentum remains strong. TPS delivered solid financials with revenues up 3% year-over-year, resulting from growth in renewable fuels, decarbonization services and PMC activities. Proprietary equipment volumes notably for ethylene projects were broadly sustained at high level. Adjusted EBIT increased by 1%, mainly driven by the stronger activity. For the third quarter, adjusted EBIT margin was up 30 basis points versus the first half of the year, bringing the year-to-date EBIT margin to 9.4%. Year-over-year, TPS EBIT margin reduced by 30 basis points, owing to the same trends highlighted in Q2, while segment's gross margin improved year-over-year by close to 100 basis points. This was offset by investments for the long-term growth of TPS through strategic initiatives, increased R&D and higher selling and tendering activity. Adjusted recurring EBITDA margins increased year-over-year by 20 basis points to 12.8%, as this metric is not impacted by the amortization of our investment in labs and pilots, as well as the greater mix of services with the associated IFRS 16 impact. Overall, this drove a 5% year-over-year growth in EBITDA to €188 million. Finally, TPS backlog closed the period at €1.7 billion, down 7% year-to-date owing to the absence of any material awards during Q3 and the relatively light book-to-bill. Business prospects for TPS remained positive and the level of engagement is very robust. Accordingly, we are confident that the trend will improve in the coming quarters. Also, as a reminder, TPS backlog excludes a large proportion of the project management consultancy and long-term service agreement, and is therefore understated by a few hundred million euros. Turning to our other key metrics and beginning with the income statement. We continue to maintain a robust discipline on corporate costs, which at €41 million are trending below the run rate for 2023 that was somewhat impacted by strategic projects, and the employee share offering. While not on the slide, I want to address non-recurring expense of €60 million, which increased in the third quarter. Beyond our two operating segments in corporate, we've identified separately for transparency purposes some costs associated to development projects. These investments notably for grid room are accordingly no longer allocated to the operating segments to provide you with better visibility. We will discuss more about our investments during the CMD. The net financial income line is very strong and nearly 50% higher year-over-year driven by higher global interest rates. Even if we are past the peak for global interest rates for now, we expect net financial income to exceed €100 million for the full year. Lastly on the P&L. At 30.3%, the effective tax rate is impacted by a change in earnings mix, with reduced earnings contribution from lower rate tax jurisdictions and more earnings derived in higher tax rate jurisdictions. Turning to balance sheet where cash of €3.5 billion is significantly in excess of the net contract liability of €2.8 billion. At our Capital Markets Day on November 21, we intend to provide more granularity on our balance sheet. Turning to cash flows, where the picture is largely consistent with prior trends. Free cash flow excluding working capital was €360 million and consistently strong supported by cash conversion from EBIT above 100%. This demonstrates continued strength in our operational execution and the tailwinds of the net financial income. Capital expenditure at €56 million is materially higher year-over-year due to investments in the Reju demonstration plant and the lease recognition of our new offices in Houston, which will contribute significantly to our Scope 1 and 2 emission reduction targets. As expected, the working capital trend improved from the first half position benefiting from initial payments from major awards in the third quarter. The trend in the fourth quarter on working capital is again expected to be neutral to slightly positive. Lastly on shareholder returns. Beyond the dividend we paid in the second quarter, we've now completed our €100 million share buyback program. As indicated previously, we intend to control up to 70% of the shares acquired as part of this program. And when combined T.EN will have returned more than €170 million in cash to shareholders during 2024 through dividends and buyback. We end the period with €3.5 billion of cash and cash equivalents. Before passing back to Arnaud, let's revisit 2024 guidance. We are upgrading full year revenue guidance from €6.1 billion to €6.6 billion previously to a new range of €6.5 billion to €6.8 billion. This upgraded guidance implies, a 7% uplift to the low end of the range and a 5% increase at the middle of the range and is underpinned by the strength of our revenue profile through the first nine months plus the backlog we have scheduled for the fourth quarter. We are also confirming our margin guidance in the range of 7% to 7.5%, which as our year-to-date performance indicates is very much trending towards the middle of this range. As I discussed previously, owing to earnings mix and the likely impact of the French surtax, we increased our tax rate guidance to a new range of 29% to 33% for full year 2024 versus 26% to 30% previously. Clearly, at this point, the surtax has not been enacted into French law. Therefore, in a scenario where the surtax is not introduced, we would expect to be at the bottom of the range or below 30%. Regardless, this does not impact our ability to comfortably increase EPS well into double-digits. I'll now turn the call back to Arnaud for concluding remarks.

Arnaud Pieton: Thank you, Bruno. So to conclude, we delivered a strong first nine months performance and we are raising full year revenue guidance, while delivering to our margin guidance. Supported by a year-to-date book-to-bill of one and our confidence in the award outlook for Q4, we expect orders to exceed revenues for the second consecutive year. Beyond Q4, we are well-positioned for notable prospects that will reinforce our backlog while supporting diversification by markets and geographies. So finally we are -- and I am very excited to deliver our Capital Markets Day on November 21 in London, during which we will update you on our strategy and financial objectives for 2025 through to the medium-term. We will offer some new insights into our growth plans, investment priorities and initiatives to enhance shareholder value. We do look forward to engaging with our investor community and sharing more about our vision for Technip’s bright future. With that, let's now open the line for questions.

Operator: Thank you. This is the conference operator. We will now begin the question-and-answer session [Operator Instructions] The first question is from Victoria McCulloch, RBC. Please go ahead.

Victoria McCulloch: Good morning. Thanks very much for your time. A couple of questions from me this morning. So with the expected LNG supply glut appearing to come from 2028, what's your current view on the volume of unsanctioned projects? And maybe more what are your customers telling you in terms of the current timelines you expect these to go forward or do you see the risk of potential delays in some of these? And secondly, on TPS apologies if I missed this it sounds like you said it's the highest quarterly revenue in 3Q. Should we expect to see that continuing into Q4? And we saw obviously a good margin recovery on a quarterly basis or from one quarter to the next. Is this back on trend to the double-digit level so to speak that you're aiming for in 2025 versus the last quarter or is there risk of seeing some additional investments coming in there? Thanks very much.

Arnaud Pieton: Thank you, Victoria. So I'll start with your first question on LNG and LNG supply. So our 2030 view for the LNG market is that the world will need 800 million tonnes per annum or so of LNG supply by 2030. As you probably know there's about 500 million tonnes currently being produced -- million tonnes per annum. So that's the existing capacity. You have a further 200 MTPA under construction and we are building a very large chunk of that about 40% of that is under construction with Technip Energies. And therefore it's leaving a gap of about 100 million tonnes per annum that is needed to bridge from the current five the two under construction and what we expect being the 800 million tonnes needed by the world by then. So the LNG market and our customers they speak much better than I do about the LNG market but a very good way to describe the LNG market is in a sense it's a market that is supply-led and not so much demand-led. So you may see an excess of LNG around 2027-2028 and this could drive some of the LNG price or cost down. And therefore it will attract more customers and more demand. And if you look back at the previous cycle it always -- I mean those are -- I mean they have the same -- similar very similar attributes in a sense that you have actually excess supply which calls for actually or attracts more demand. And therefore the supply to demand gap is being filled. And thereafter it triggers another wave of investment for more supply and so on and so forth. So I think we are in the third or fourth cycle of this kind. And therefore we are -- based on what our customers and what we're hearing from our customers there's no anxiety on our side. We're quite optimistic about the LNG pipeline. We have quite a few prospects and FEEDs that are ongoing. We've been selected for Lake Charles and that's -- we're now beyond FEED stage. We have been selected for a FEED in Rovuma in Mozambique by Exxon. I mean the pipeline continues to be rich in LNG for us going forward. So no anxiety. And I would say a lot of optimism from my end because I think the future is about renewable and gas -- natural gas. And therefore LNG as part of the natural gas it's to have enough dispatchable electricity and power for the world renewable alone is not satisfactory. So you need the combination of renewable and gas to make this power dispatchable. So we are very optimistic about the outlook for gas at Technip Energies. And that's very much in line with what we are sensing from our customers who are now -- have 20, 30, 40 years of experience into the LNG market. And that's why they continue to announce projects. And they are looking at the world 2040-2045 and are a bit less concerned by the immediate price of commodity in 2024. So it's a long-term game. And therefore, we are very optimistic and positive about it. About TPS, well, we -- I mean, I would say, that we are almost a year ahead when we have a quarter that is closing at a run rate that would exceed €2 billion revenue. That's the target we have provided for 2025. So we are very near this target already in 2024. The momentum will continue and we'll tell you more about that in, I mean, during our Capital Markets Day. But our outlook and our objective doesn't change. TPS at or above €2 billion for 2025 at a double-digit margin. That continues to be our objective and it will be confirmed during our Capital Markets Day.

Victoria McCulloch: Super. Thanks very much for the color. Appreciate it.

Operator: The next question is from Guilherme Levy with Morgan Stanley (NYSE:MS). Please go ahead.

Guilherme Levy: Hi. Good afternoon. Thank you for taking my questions. I have two if I may. The first one could you share some comments with us in terms of engineer remuneration inflation rates? I know that of course the company can change the geographical mix so not necessarily it will fuel the inflation in terms of margins. But if you could perhaps share some color in terms of what you're seeing on a similar country basis? And then the second one, I know that we don't get the full financial statements in this quarter, we just get them on a half year basis. But on your provisions balance, could you say a few words on the contingencies related to finalized contracts that line in the beginning of the year was at €170 million and that declined to €90 million in the first half. So if you could share some color there on what happened in terms of that balance in the third quarter that would be great? Thanks.

Arnaud Pieton: I know Bruno is burning to take your second question. So I'll ask him. I mean, he's going to take it first and then I'll answer your first one.

Bruno Vibert: Sure. Hi, good afternoon. So delighted that our half year releases are well read. So there is a request for more even at quarters. So right now the trend on the - as always it's a portfolio that matters. And from one quarter to the next you can have different parts of the portfolio that are providing differently. To go back to specifically your question, the impact or if you had the same pro forma disclosure Q3 versus Q2, you would see a much less meaningful variation on this line versus Q2. So almost no, or let's say, very small change versus Q2. So it was really from the rest of the portfolio that were the drivers.

Arnaud Pieton: And on inflation and the impact on the business, so as you know, because you know us well and you're following us and we -- our projects cost base or in our projects cost base we account for inflation, okay? So being for hourly rates equipment costs, et cetera, when we are phasing projects that are going to last for three to -- up to eight years for some of them we take no chances. We bake into our price in the cost base of our projects, a percentage dedicated to inflation on a yearly basis. So it could be 3% 4% per year. If inflation is above what is included in our cost base well, we may have a little bit of an exposure, but we're only talking about the gap between what is baked into our cost base and the actual inflation rate. And if the inflation rate is a bit lower then we have an upside. And if it's not an upside, but on the contrary an exposure, we have also contingencies and technical contingencies to cover for that. As you know as a -- I mean, we are extremely cautious in our execution in a sense that we do not speculate. So on cost of equipment material bulk copper cables and the rest we have a very high coverage on our, I would say, tenders and prospects when we submit a price to our customers. I would say, 80%, 85% of our cost base is backed by firm offers with the validity that is necessary for us to be protected, which means that when a contract is awarded, and I will repeat what I've repeated several times, we do not speculate on when to place the order. If we have a firm price we go place the PO and we secure our execution. We don't speculate hoping for better prices later on or God knows what. We're not in the business of speculating. We're in the business of delivering projects. And our practice our disciplined approach protects us from, I would say, the artifacts that you will see inflation and whatnot. And this is how the portfolio continues to give, and continues to deliver the results that we are delivering quarter-after-quarter. This -- the attribute of the project delivery business within Technip Energies is one that is, I would say, providing a very solid baseload to the company with a very strong cash generation. And what is important is that the portfolio continues to give and that we manage this portfolio in a way that it is predictable and delivers results to you and our shareholders. So no speculation, a very, I would say, good level of protection. When we cannot get the right protection, as you know, we go open book and therefore, we pay the actual price fully reimbursable or open book. None of our projects are truly fully lump sum. As you know, it's a blend. The importance being the level of protections and the predictability we can deliver.

Guilherme Levy: Thank you.

Operator: The next question is from Kate O'Sullivan, Citi. Please go ahead.

Kate O'Sullivan: Hello. Thanks for taking my questions. Firstly on TPS, strong results this quarter but we did see slowing order intake. So just based on the pipeline you have and the discussions you're having with customers, could you provide some color on any areas you have noticed a slowdown or indeed an acceleration. And second question on the accounts. You had a step-up in non-recurring expenses this quarter attributed to the set-up of new business ventures. I think you mentioned review costs are allocated here. Which other businesses will you allocate under this line? And how do you expect these to trend over the coming quarters? Thank you very much.

Arnaud Pieton: Yes. Hi, Kate. So yes TPS, a bit of a soft order intake for the quarter. And you've noticed a backlog that is a bit lower than what it has been in the past quarters. But very strong momentum and we have actually very good line of sight for Q4 for potential, I mean likely awards that will be dominated by, I would say, products and technology and therefore, really accretive and a bit less services therefore a bit less man-hour-based. So, we've had a wave of quarter I mean two, three quarters with -- that were marked by more services awards and less product or proprietary product awards. In Q4, this could be reversed. We have in the domain of carbon capture, for example, some very good leads. So we expect the portfolio to again, be tainted a little bit more by more products and technology and a bit less services. It doesn't mean that services would slow down in absolute terms. But in relative terms, it will be more T&P and a bit less services. Again, on a percentage basis. Where is it? We still see a very strong momentum in, I would say, the blue chain. So, blue ammonia, blue hydrogen and carbon capture. There's really a very strong momentum at the moment. Maybe a bit of a slowdown in what might be energy derivatives that are more or less needed at a time where there is a bit of a slowdown on the macro environment. But all in all, the portfolio continues to deliver. What we -- the positioning that -- I mean the position that we've taken in the new markets, in particular is really generating a lot of demand. There's need for more energy. There's also a need for less emissions. And we are being asked to contribute and to do a lot of studies related to decarbonization and reduction of emissions. So all in all, I mean, momentum continues to be strong. Q4, you should see a recovery in the backlog, because it will be populated or colored by more products and technology. And when we say more products, all of a sudden you have more volume per order, okay? Because when we sell a proprietary product, the orders are in the several tens of millions or in the hundred million per order and therefore, you bring immediately more volume and also, a more longer cycle aspect to the order within TPS. So, that's -- we're pretty -- we're feeling pretty good about it. It's just a matter of time and Q4 should be providing the evidence of what I'm describing here. Your second question was -- maybe Bruno will take it.

Bruno Vibert: Yes. Good afternoon, Kate. So on non-recurring, which was indeed a bit of a step-up versus the previous quarters, not the full amount was associated to others but let's say, high-single-digit for mainly Reju, and then other initiatives for other markets but that are not as mature, so maybe a bit too early to name them out. At the CMD, we will provide beyond 2024 what can that look like. We are very excited, for instance, about Reju. Recently, they announced that they had communicated -- they concluded with waste management and goodwill in the US, some agreements that can be the source for feedstock, which is a base for PET recycling as you know. And all this work and all the team, which is gathered to create this ecosystem is beyond TPS, it's beyond project delivery. This is why we've decided for transparency purposes to highlight it. It's not corporate to highlight it there. The team is picking up pace doing a lot of work. For Q4 you could expect something around still high-single-digit in terms of expenses. But for beyond that depends on progress and that's something we would share more at the CMD.

Kate O'Sullivan: Thank you very much.

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

Jean-Luc Romain: Good afternoon. Thanks. My question relates to LNG technologies. ExxonMobil (NYSE:XOM) has chosen technology by Chart Industries (NYSE:GTLS) to develop their Mozambique project. I was wondering, if your own SnapLNG technology was competing for this or not? And what are the prospects for SnapLNG?

Arnaud Pieton: Thank you, Jean-Luc. We've worked alongside Exxon significantly in preparing for the Rovuma FEED as you may imagine. And so yeah our own SnapLNG solution was put on the table and considered. Now the size of the LNG train by SnapLNG is much higher than the individual size of the trains that will be eventually built for Rovuma. So Snap is north of two MTPA. It's two million to four million tonnes per annum per train. The trains that Exxon are contemplating as part of Rovuma LNG are below two million tonnes per annum. So not totally -- I mean, we played with it, the size of the modules whether it was suitable for the geography, the site conditions, et cetera. And the SnapLNG as designed probably was a bit too large to be accommodated on the specific site for Rovuma and that's fine. We know the Chart's technology. We've integrated it in the past. So we are very happy to be in this FEED competition. It's a prospect that really fits really squarely within the strength and the sweet spot of Technip Energies. It's all about modularization. So things that we know how to do really well, and therefore very happy to be part of the race. As for Snap, it continues to be I would say a prospect for North America and where all the conversations we are having as you know are on the basis of modular trains. And, yeah, so we continue to have a couple of prospects in North America, which outcome is depend -- I mean dependent on the list of the LNG moratorium in the US. But one important point for me about SnapLNG is whether or not we are having extreme successes or whether we are selling one Snap every two years. The important is that the fact that we invested into Snap and that we designed it and it was a pre-investment, it's becoming I would say an entry point for conversation with customers. So they are coming to us because we have it. Therefore, it triggers conversations about the various versions of modularized facility that we can design, we can envisage, et cetera. So there are byproducts of this investment. For us it was about a €10 million investment to complete the pre-design of this SnapLNG. And the byproducts are the things you don't see, which are -- because we have it, therefore, customers come to us for discussions. And whether or not they adopt it in full and it's not that important because it allows us for a different type of interaction and early engagement. And the fact that we are involved in all the LNG prospects that are modularized, it's also the result of this pre-investment.

Jean-Luc Romain: Thank you very much.

Operator: The next question is from Richard Dawson Berenberg. Please go ahead.

Richard Dawson: Hi, good afternoon, and thank you for taking my questions. My first question is on Project Delivery where it was a pretty strong quarter both on the top-line and with margins, sort of, delivered above your medium-term framework. Could you speak a bit more about what drove this? And looking forward as NFE and NFS contributions continue to ramp up, how should we think about PD revenues into next year and particularly on the margin level? And then my second question is on tax. And with an increase in the effective tax rate for this year and the potential surcharge in France, could you provide some details just on your pre-tax income? And specifically what portion of your profit before tax is actually subject to tax in France? And presumably some of the profit is taxed in countries where the projects are actually located and subject to tax treaties, et cetera? Thank you.

Arnaud Pieton: Hi, Richard. So for Project Delivery, you may recall a couple of years ago, of course, we reached a bit of a trough in our Project Delivery top-line revenue as a result of pulling out of Russia and pulling out of the Arctic LNG2 project, which we had to replace in the backlog and therefore replenish the backlog, but also I would say start again on a positive momentum in terms of the growth of our revenue. So the good news is that, as I would say promised and as we indicated 2023 -- 2024 is showing progression on the revenue when compared to 2023 for Project Delivery and it's a significant progression of the top-line. And we'll share more about that during our Capital Markets Day, but expect to see -- and that's what I was trying to convey in my prepared remarks expect to -- continue to see some growth in Project Delivery in 2025 in terms of revenue as the portfolio continues to mature. Of course, we will of course onboard new projects, but NFE and NFS will be a stronger contributor. I'm going to point again to NFS and we have reached the peak mobilization, I repeat 45,000 people on site. We will be at this plateau for or throughout 2025. So there's a significant level of progress that will be achieved in Q4 this year and throughout 2025 on those large LNG projects in Qatar. After that the -- in terms of the performance for 2025 on Project Delivery, I would say just join us for the CMD. We'll provide you more granularity. I think it will be a bit premature for me to give you all that three weeks ahead of our Capital Markets Day. So I'm sure you'll join us and you'll have all the answers to your questions. Bruno maybe on tax?

Bruno Vibert: Yes. Hi, Richard. So on taxes, as you know we are not doing a lot of work for projects for France projects that are infrastructure located in France, but we have a French operating center which is quite large and has a lot of value. So for any project, usually you will have tax which is borne in country where the infrastructure is, plus where the execution center are operating where you have some added value. So this is why the surplus tax can have an impact on Technip Energies given there is some tax base in France with the operating center providing higher value services for a lot of different projects. Now, of course, this tax law is not enacted yet. So it's quite speculative, at this point we're following. But as we've revised the guidance, we've included what could be the scenario. So it will have -- if enacted it will have a limited impact, still a few basis points of effective tax rate. If it's not enacted, then that's why we would remain in the low range which was provided, which is just below 30% for full year basis. So to be monitored. If it may have a small impact, hence the tax guidance which was slightly updated but not major.

Richard Dawson: That’s great. Thanks for the color.

Operator: The next question is from Guillaume Delaby of Bernstein. Please go ahead.

Guillaume Delaby: Yes. Good afternoon, Arnaud and Bruno. One question if I may. Globally, when I look at the title of the presentation Arnaud when I'm listening to you, I have the impression that the way you are communicating is changing a little bit that you may be more optimistic for 2025. So I know it's too early to provide a guidance or whatever, but if I understand you correctly you expect some revenue growth in 2025 and probably as well some EBIT growth. That's my first question. And then I will have a related question.

Arnaud Pieton: Good afternoon, Guillaume. I mean I'm very upbeat today because it's my birthday first of all. So I'm happy to share that with you. Then yes, I mean we -- I think the Technip Energies is on a trajectory that is a growth trajectory. So I'm not going to disclose too much because the CMD is just three weeks away. But yes, expect to see growth in 2025 top and bottom as a minimum because there's top-line growth, mechanically you will have bottom-line growth. And also because the outlook irrespective of the macro -- actually the current macro environment, but there are some macro -- I mean macro trends long-term trends that continue to support our business. And the strategic choices that we've made and where we've placed our bets and our investments clearly, it's in areas that are very needed going forward. It's more molecule, less emissions a lot of decarbonization while having to continue to supply and provide energy. And I'm coming back to what I said a bit earlier which the winning combination for us and for me and I'm not the only one is really a combination of renewable electricity plus gas so that -- so as to make the electricity dispatchable. So gas is needed. And we -- as you know we are heavily invested into gas. And we see yes, globally a positive outlook. And some of the choices we are making and investments we've made and Reju is an example and we'll talk about Reju during the CMD. So, too early to say, but there's traction. And it's opening new opportunities for Technip Energies in terms of alternative business models and ways of making an earning. So, all-in-all, a very positive I mean momentum and time for Technip Energies. Our headcount is growing. You'll hear from us during the CMD about that. And yes, there's no -- we're not struggling with keeping our people busy.

Guillaume Delaby: And maybe a quick follow-up. The big surprise this morning was the margin on Project Delivery, which I think is somewhat a surprise given the still -- given the fact that your backlog is still relatively young. I understand from your comments during the call that the current level of operation at NFE is likely to continue in 2025. This probably suggests that NFE is going to be an important building block of your margin in 2025. You can just say correct. So, if it is correct then there will be room for other people to ask questions.

Arnaud Pieton: Yes. Okay. Bruno is a man of few words than me. So, Bruno will answer that.

Bruno Vibert: NFE absolutely will be an important block, top line and of course bottom-line is progressing as per plan. In terms of portfolio as always when we reach critical milestones like final acceptance provisional acceptance or some project which has happened in Q3 this derisks and can have an impact. So, we've had some good contribution from some of these projects. The trend for more projects at early phase which are dilutive by design as top line growth within projects will continue to driver. But the quality of the backlog plus the portfolio, which will evolve will become a bit blown more blended. So, that we are trying to show in there. Growth of top line consistency in delivery which supports a long-term let's say margin and growth in absolute terms as Arnaud just highlighted.

Guillaume Delaby: Thank you very much and happy birthday Arnaud.

Arnaud Pieton: Thank you, Guillaume.

Operator: The next question is from Sebastian Erskine at Redburn Atlantic. Please go ahead.

Sebastian Erskine: Hi there. Good afternoon and thanks for taking my questions. obviously, very robust set of results. Two for me if I may. The first one could you give some color on in your view the sensitivity of your commercial pipeline to a potential Trump presidency, particularly risks on the Inflation Reduction Act? I'm kind of thinking a little bit about the Exxon Baytown low carbon hydrogen project where you're doing some FEED work on the Section 45 Clean Hydrogen Tax Credits? And then secondly on the order outlook into 4Q, I know it's been asked a bit before, but just some color on sort of nearer term projects that you might see coming through? An update maybe on Coral Norte and then obviously on the Suriname FPSO where you were doing some work alongside SBM Offshore that would be really appreciated? Thank you.

Arnaud Pieton: Hey Sebastian. All right. So, color on post-elections. That's all I can say because I'm not going to speculate is that there's something that we stated in our prepared remarks, in mine certainly, about diversification in the portfolio for Q4 2024 and throughout 2025 order intake. The U.S. is a geography where you will see us play. We -- two years ago, we signed NFS in Qatar. We have today a presence in the Middle East that is significant. And it takes time for a company like Technip Energies to completely -- I mean to properly build some diversification into -- geographical diversification into the portfolio. So, we have taken the decision together with our Board of Directors, of course, to rebalance the portfolio. It's something that we -- a decision we have taken a year and a half ago. And therefore it's influencing the type of project and the projects we are chasing and where we are chasing them. So, the U.S. is obviously an important territory for that. We have you know about Lake Charles LNG. We are still in the race for another -- with another developer in the U.S. Obviously, if Trump wins the election so we can expect that the moratorium on LNG will be lifted maybe faster than if it's the current administration winning. Now, the current administration winning doesn't mean that the LNG moratorium won't be lifted. Some are of the opinion that it will take a bit longer but it will be lifted nonetheless. So -- but if it was to be a Trump victory so for sure, I believe we will see a faster lift of the moratorium. And therefore, it will unlock a pipeline of opportunities. And we don't need 10 of them for us one or two is plenty in the US and we have them you know, you know about them and we've been selected. And therefore, it would color and come into our backlog and put a large US content into it. In addition to that, and the IRA and the rest, I'm very positive about the blue chain, so blue ammonia, blue hydrogen in the US in particular. You know about our involvement for Exxon in Baytown. We have just been awarded but we may talk about that during the CMD. Pretty large FEED for another US customer in US, again for the blue molecule at FEED stage, okay? But all that – I mean all those are signs that we're going from pre-FEED to FEED and that the combination of gas plus carbon capture in a country that is taking a very pragmatic approach to incentives for decarbonized solutions. Yes all that makes of the US a very credible play for Technip Energies and happy to report that we are playing. And this comes on top of other things that we will do there such as pure carbon capture projects et cetera. So clearly the US and the UK, because you know about Net Zero Teesside, H2Teesside, et cetera, this could contribute to a very I would say significant diversification and enrichment of our portfolio in Q4 and also within 2025. Okay. Just last one on Q4, but I think I've listed – I mean you've listed the prospects. It's just a matter of us being allowed to declare the contract and FIDs being declared by the customers. Coral Norte it's very much a question for Eni but it's – is it on this side of the 31st of December or just on the other side it won't change much for us. At the end of the day it will be a project and we'll be happy to enjoy it. So that's where we're not totally a quarterly business. But we nonetheless, expect a very strong inbound in Q4.

Sebastian Erskine: Many thanks. Look forward to the update. Thank you.

Arnaud Pieton: Thank you.

Operator: The next question is from Bertrand Hodee, Kepler Cheuvreux. Please go ahead.

Bertrand Hodee: Yes. Arnaud, Bruno. So a question related to order intake was €4.8 billion first nine months. Last time we spoke Arnaud, it was at our autumn conference and you pointed for a potential €4 billion for H2. Is it still valid or do you see some risk like you mentioned Coral Norte sliding into 2025? And then the second question is on Lake Charles. So it's a very large LNG project. FID is still pending. But can you give us an order of magnitude of the size of the project Technip Energies share? Because it's a bit difficult to gauge the size, given the various scopes and the framework around this project. But is it a €4 billion to €5 billion potential €1 billion project Technip Energies share or is it lower or higher than that potentially?

Arnaud Pieton: Thank you, Bertrand. So I'll start with Lake Charles. So Lake Charles, we are – Technip Energies is a leader of the JV and we have KBR (NYSE:KBR) as a partner. The project will – I must clarify the fact that this project in the US is highly modularized. And I need to repeat that we will not be taking any form of lump sum risk in the US. So it's – there's a very large part of the project that would be reimbursable and therefore, totally derisked. We're not taking any lump sum turnkey risk in the US including in LNG. Okay. The size of the project, it's north of 16 million tonnes per annum. You know the market really well Bertrand. So the potential value of this contract if it reaches FID, you will be definitely in the areas that you've mentioned, if not a little bit above that. We can provide more granularity maybe during the CMD, if there's more progress on that one. But it is – it would be a significant order considering the size of the project, 60 million tonnes per annum. That's basically two large trains similar to Qatar, et cetera. So it's – but we are a 50-50 JV partner in this. As for H2 2024 yes, no change to the potential. So we – while we don't – we are not controlling FIDs and we are in the hands of our clients for that. We have several prospects. And we mentioned one in our prepared remarks without mentioning it but the delivery of large modules for projects in Suriname, you would guess what I'm talking about and this is a significant order. You add to that the orders that we will naturally book for TPS on a regular – I mean average run rate basis. And we have a few other things to -- which could be announced. So yes that's confirming what I said at your conference.

Bertrand Hodee: Thank you.

Operator: The next question is from Daniel Thomson at BNP Paribas (OTC:BNPQY) Exane. Please go ahead.

Daniel Thomson: Hi. Good afternoon, and happy birthday, Arnaud.

Arnaud Pieton: Thank you.

Daniel Thomson: Yes. Two quick ones hopefully not -- hopefully, quite straightforward. So we've spoken a lot today about sort of derisked execution in the US, which I think it's a very important point given how many projects there are sort of looking to take FID over the next year or two. On the modular approach could you just sort of remind us where the modules are fabricated for Technip Energies? And if there is any sort of threat in terms of tariffs that may come up under a certain administration or would that sort of -- any cost related to that sort of be borne or be reimbursable? And then secondly, just on Qatar North Field East can you tell us how close you are to completion on the first train? Thank you.

Arnaud Pieton: Okay. Yeah. Thanks. So on the -- I will not answer your second question because that's a question for -- that you can ask our customers and they would be -- obviously, I have a good indication of how close we are to completion. But the project is on track it's progressing well and it's something that we signed in 2021. So I won't say more. As for the modules, well, we have a history of building modules of various sizes in countries like Indonesia, China, Middle East, et cetera. So the yards that we -- or Southeast Asia, like Malaysia as well. The yards we are building with include China. So the -- but I will qualify my comment. On the execution plans, we're basically preparing for our customers, two execution plans one, which includes China and one, which doesn't include China and we have alternatives for module fabrications in other yards than China. So the -- as you can imagine, we as a company we will not take the Chinese risk. So this is something, if a client elects to go for China then it would be his choice, and we will support it. But we will enter into the contract with the right level of protections as a company. So no risk-taking by Technip Energies, or no exposure to sanctions. If China is selected for the right reasons then we'll support it. But okay -- but of course, this is a risk that have to be supported by our customer, and I would say a decision that will be taken jointly with the customer to go for one execution plan versus another one. But in the meantime we've been more than scouting. We've been visiting signing agreements and getting comfortable with alternatives. They are obviously mostly in Asia and also in the Middle East. So we are prepared for both eventualities.

Daniel Thomson: Perfect. That's very helpful color. Thank you.

Arnaud Pieton: Thank you.

Operator: The next question is from Mick Pickup, Barclays (LON:BARC). Please go ahead.

Mick Pickup: Good afternoon, gents. Arnaud happy birthday. I've just looked at your age and you've made me feel a bit older. Can I just ask about the bolt-ons, please if I may. Expertise in process engineering and piping design, I would suggest they are core skills of the company. So what do they bring or is that just a shortness you're addressing?

Arnaud Pieton: Well, we're growing headcount in the company, Mick, I would say, and we'll provide details during the CMD about that. But it's been growing significantly. What this small bolt-on is contributing is something that we can never have enough of are PhDs, and experts related to molecule and process technology basically. So it's chemistry. And if there's something that is on very, very high demand in our industry today are experts in process technology and molecule transformation. And so that's what we've acquired. That's this expertise. Of course, it goes beyond because they were and are doing engineering for our customers. So there is piping et cetera. But the core that we're buying is a competency that is a rare commodity. It's process technology and molecule.

Mick Pickup: Okay. Thank you. Cheers.

Arnaud Pieton: Cheers.

Operator: That was the last question. I'll turn the conference back to you for any closing remarks.

Arnaud Pieton: That concludes today's call. Please contact the IR team with any follow-up questions. Thank you and good bye.

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