Gaztransport & Technigaz SA ($GTT)

Good afternoon. This is the conference operator. Welcome, and thank you for joining the GTT First Quarter 2026 Activity Update Conference Call. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Francois Michel, the company's CEO. Please go ahead, sir.

Good afternoon, everyone, and welcome to GTT's activity update for the first quarter of 2026. I am sitting here in Paris with Thierry Hochoa, our CFO. And together, we will walk you through the usual key business highlights, but also our revenue for the first quarter. The agenda for the presentation today is the usual one. I am sure that you have noticed that we now go with a new setup, hence, first introductory point to further explain what lies behind the 1 GTT brand. I will then provide you with a business update for our key activities, meaning the GTT Energy and GTT Marine divisions. Thierry will elaborate on our revenue for the first quarter, and I will then share with you closing remarks before we can open the floor to your questions. So first, the 1 GTT brand. This new organization which emphasizes the fact that GTT is now at a turning point following the very successful acquisition of Danelec last year and taking to account our ambition, which we have explained to further develop the core business, but also associated services. It was very important for us and for our customers to bring all teams together under a clear vision, but also a clear structure. So the creation of 2 divisions, GTT Energy on the one hand, and GTT Marine on the other thus provides greater clarity on our activities to our customers and to our staff. It fosters the execution of our strategy to, of course, keep the core business running but also to ensure the success of our service approach to the shipping industry, in particular, in the LNG. I have already said very clear operational targets for these 2 divisions. For GTT Energy, it is 3 priorities: accelerate innovation, strengthen our service offer and revamped our LNG as a fuel and onshore offers. For GTT Marine, we -- the priority is to deliver on the synergies combining the hardware and software solutions that we have now in this division, and you will see the first results of this strategy. We have also put in place hub of advanced technologies to put together in the same -- under the same roof, all breakthrough technologies and venture capital. Let's turn now to our first activity, GTT Energy. Very much in line with our expectations and with the messages that I had delivered at the annual results and in line with the growing need for new LNG carriers in Q1, our order intake continued its upward trend. We have announced 29 LNGC orders in the first quarter. It marks our second best Q1 commercial performance after the 2022 record year. We are close to that level. We have also received 2 orders for very large ethane carriers, each of 100,000 cubic meters capacity and one onshore storage tank. This momentum, which I had announced has continued despite the situation in the Middle East. We have registered 8 LNGC orders just in March, and the momentum I can tell you continues to date in April. We are, of course, closely monitoring the current situation in the Middle East. To date, and I will come back to this point, this conflict has no direct impact on GTT's business activity meaning on orders and on deliveries. And if you look at deliveries, year-to-date in Q1 2022 LNGC has been delivered versus '23 last year, so level, which is totally equivalent. So let's turn to the impact of the current situation in the Middle East on LNG global production capacity. As we all know, the closing of the Strait of Hormuz has heavily disrupted the energy and the shipping markets because about 20% of production volumes are not available today. But if I now look at the production capacity today, only about 3% of the production capacity in LNG has been damaged with the drone attacks on [indiscernible]. As you know, 2 liquefaction trains have been hit. We know that this infrastructure will restart. It will take perhaps a couple of years. Some people say between 3 and 5 years, it could be faster than that, but who knows. I would like to underline, however, a couple of things that, first of all, the situation does not slow down or underline the need for new vessels to export future volumes associated to FIDs. And if I look at the additional capacity, which is expected to come online by 2030, it represents 180 million tonnes per annum of additional capacity, which is 40% more than the production level today. Most of this coming from the U.S.A. And of course, all of this will require new vessels. Now if I look at the FIDs that can come on top of this already high level of FIDs that have been taken. You have the list on the screen the list of FIDs that are likely to reach -- to be taken this year or in '27 confirms the greater exposure of the overall LNG production to the U.S.A. and to other regions than the Middle East. And as a reminder, this year, 23 million tonne per annum of FIDs have been taken, including in Qatar and in the U.S.A. and we start the year after a record level in 2025. Now if we look at the shipping routes and the shipping intensity, what you see is that the war confirms that energy security risks will remain persistent. Indeed, the closure of the Strait of Hormuz calls for greater flexibility to ensure energy security and all this at the most reasonable price possible. And we know that some countries with significant exposure to Qatar such as India, Pakistan, Bangladesh, I could mention Taiwan, [indiscernible], Korea, China, but also in Europe, Italy, will need to diversify their source of LNG. So looking ahead, what we anticipate is that we anticipate that heightened scrutiny on the LNG supply diversification which could possibly result into higher shipping intensity over the long run. But we also anticipate the need to create more buffers in the LNG capacity in storage in particular. Now let's move on to our second activity, GTT Marine. The GTT Marine division won new contracts, very good contracts, both in the performance solutions and in the safety units. In terms -- as for safety, GTT Marine has secured new accreditation from 2 new oil majors which is a prerequisite to expand its addressable offshore fleet, very good news. And second, we start to leverage our broad customer base to sell more of the systems in performance for performance solutions. Meaning, adding performance and value optimization to initial data collection. And consistent with the strategy we have, in particular, signed a new contract, a very good contract with Petrobras, a new customer to equip up to 120 vessels with a combined hardware and software solutions. Third point for this new division, the integration of Danelec in the GTT Group is progressing as planned, and we are well on track to deliver the synergies that we have announced. Let me now hand over to Thierry Hochoa, our CFO.

Thank you, Francois. Good afternoon, everyone. Now moving on to the financial part of the presentation. Let's start with the order book continuing the commercial dynamic seen in the first quarter of 2025. GTT recorded a total of 32 orders in the first quarter of 2026. They include 29 orders for new LNG carriers and 2 VLEC, very large ethane carriers and 1 onshore storage. Their delivery is scheduled between the second quarter of 2028 and the fourth quarter of 2029. This is our second best first quarter commercial performance. Over the period, 22 LNG carriers were delivered a similar level with the first quarter of 2025, around -- not around, but 23 LNG carriers delivered last year for the first quarter. Finally, our backlog at the end of Q1 2026 remains very solid with 297 units for the core business and 46 units for LNG assured. Let's look into more details of the revenue by activity at the end of Q1 2026. Total revenues at EUR 193 million are up 1% compared to Q1 2025 and driven by new builds standing at EUR 173 million, meaning minus 4% compared to last year and mainly impacting from lower order intake in 2025 driven by revenues from services increased by 28% at EUR 5.4 million, thanks to a higher level of assistance to vessels in operations and pre-engineering studies. Regarding GTT Marine, revenues increased by 208%, thanks to the contribution of Danelec acquired last July. I now hand the floor back to Francois for the outlook and the key takeaways.

Thank you, Thierry. So in the absence of any significant order delays or cancellations, we can confirm today our 2026 objectives. Our estimated 2026 consolidated revenue ranging between EUR 740 million and EUR 780 million. Our estimated EBITDA ranging between EUR 490 million and EUR 530 million. And of course, we can confirm that the dividend policy will remain unchanged. So a couple of takeaways after this first quarter. And before we move on to your questions, the first quarter is very well in line with our expectations. And I think what we had announced at the annual results we have seen a sustainable of orders recorded at the end of 2025 continued despite the geopolitical situation and in fact, even accelerated. We saw revenue for the first quarter slightly up versus last year, which is somewhat a good news, but well on track. And we also saw a growing contribution of GTT Marine with commercial wins consistent with our combined offering, combining hardware and software solutions. As again, as of today, and we are cautious. But as of today, the conflict in the Middle East has no direct impact on GTT's business activity. Thank you for your attention, and we are very happy to take your questions.

[Operator Instructions] The first question is from Matt Smith of Bank of America.

I had a couple, please. I think last time we spoke, you talked to around 150 orders to come through over the next few years, perhaps next couple of years as a result of FIDs already taken on LNG projects. I guess my question really was, have you assessed on the pace of those orders coming through. I think you referenced largely in a 2-year time period. Has that assessment changed at all? Does the excess of Qatari vessels make any difference to your assessment there? That will be the first one, please. And then the second one would be turned into digital or now marine. You pointed out that this is now 7% of group revenue, so quite significant. I just wondered if you could add some color later thinking how material could this be by 2030, perhaps in terms of group contribution? Or what's the sort of growth rate that we could see with the benefit of the acquisitions, the synergies? Any additional color there would be useful, please. Thank you.

Thank you. So regarding the pace of the order intake, we have no information whatsoever today regarding a slowdown of the pace of those orders following the FIDs of last year. And the majority, what I can say is that the majority of the ships related to the FIDs of last year still needs to be ordered. So after the end of Q1, and of course, it's a little bit difficult for us to earmark exactly where the -- for which FID the ships are ordered, sometimes we don't know. But from the 29 ships that have been ordered in the first Q1, we know that 10 ships are unchartered, 19 ships are chartered. And from those chartered ships, only 5 are related to the FIDs from last year. So the majority of the volume that we have discussed about still needs to be ordered in the coming 2 or 3 years, I mean, with the usual uncertainty. Second, regarding digital, we are exactly on track with our budget after the first quarter. We will report on this Marine division because it includes, in fact, the marine hardware and digital solutions at the end of the first half of this year. And we are also on track to deliver the synergies of EUR 25 million to EUR 30 million expected at the end of 2030. Today, our vision is that this division, of course, without M&A that could represent 10% to 15% of the group revenue, perhaps a little bit more, but that's the vision today.

The next question is from Guilherme Levy of Morgan Stanley.

The first one, just thinking about secondary implications for your business from the current conflict. If you think about an environment in which the oil prices stay higher for longer, how would you think that could increase demand from shipowners for performance improvement solutions on your revenue business? And then secondly, maybe a question related to that, but LNG view, what could be the potential in the first year if oil prices stay say at spot over a prolonged period of time?

Thank you for the questions, which are hard questions. In our view over the long run, it is clear that there will be longer LNG routes and also longer periods of storage and buffer storage that will increase the need for low boil-off rate and additional performance solutions, as you point out. I am not -- at least this is what we assess at the board level. I am not suitable to put specific figures based on that, but this is the trend that we see, and I hope that I can give more specific indication after the first half of this year. Regarding LNG as a fuel, today, we believe that the move towards LNG as a fuel is primarily due to environment concerns and that this trend will continue. I have asked the teams to totally revamp our offer of systems including to be able to have a prefabricated systems delivered on the shipyards but also turnkey solutions, including fully installed solutions. And so the question for us is probably less a question of market evolution than a question of penetration of our solution, where I believe we can get a lot of business. So it can be very significant, but it will take me a couple of quarters to revamp the offer and to present a fully revamped offer on new technology and new commercial systems before the end of the year. That's for sure.

The next question is from Richard Dawson of Berenberg.

Two for me. So could see no direct impact from -- on GTT from the Middle Eastern conflict yet. But is there a risk that this could change the duration of the conflict extend further? So can we maybe see some of the Middle East in clients asking for construction or deliveries on those vessels to pause as those LNG projects start-ups are delayed, so particularly the Qatari volumes from NFS and NFE, is that potentially ahead of risk? And then secondly, just going back to the restructuring of the business. So what does that really mean from an operational point of view? Will there be separate management teams running GTT Energy and Marine, for example? And can we maybe get more disclose on profitability between the 2 segments?

I would say -- so thank you for your questions. Regarding the direct impact, what I mean is that today, for instance, we have very indirect impacts on our ability to conduct business, such as logistic constraints to travel to the region, for instance, to engage with customers. And so of course, if the situation were to stay to last for a very prolonged time at some point, we could expect some logistic delays or just issues in interacting with customers or supporting the customers in the region. But it's very important to see that today, there has been absolutely no indication whatsoever of any slowdown of construction. No cancellation of FIDs, no [ offer ] of ships. And to the contrary, the indications that we have received from the Qataris is that they ask more the engineering companies to be able to restart as soon as possible the construction and the buildup of the capacity in Qatar as to offset at least partly the -- even in the short run, the capacity that has been damaged. So we have no indication whatsoever that there is a long-term delay. If there was a delay, it would be very -- an impact, it would be a very indirect such as disruptions in the supply chain, in particular, in electronic components because to deliver ships, you need electronic components, but we are not yet there. I believe so and far from there. Second, yes, in terms of new organization, for me, it means 2 business units, of course, one which is very much larger than the other one as we speak but the Marine activity is a fully operational business unit with its management well in place with clear operational priorities. We will report on the results it ahs a CEO, a CFO and a management team. Regarding GTT Energy for the moment because of the size of the business, in practice, I run this division myself, together with the management team of the group.

The next question is from Kevin Roger of Kepler Cheuvreux.

The first one is the kind of follow-up on the order intake dynamic. Basically, Q1 has been very good, and you implicitly say that you still need to have a lot of orders for 2025 FID project. So do you expect in a sense to be able to replicate the Q1 commercial performance over the next few quarters just to understand what you expect as a dynamic, which is quite important in a way for the share price reaction? And the second one is also on the, let's say, long-term outlook because when we look at the implicit comment that you made from the Middle East, which is basically new LNG project diversification, possible increase, investment intensity, more buffer, et cetera. Can you give us a bit of color on what it makes as an impact on the 10-year market outlook? And if you can, in a way, precise a bit the famous EUR 450 million plus, plus number that you provided at the full year earnings. If you have a bit of sense or a bit more color on where you think this number can lend?

Thank you. Thank you for your questions. So regarding the order intake dynamic, as you know, we cannot guide on orders and certainly not on a quarterly basis, but explicitly, I can say that the vast majority of the ships that need to be ordered after the 2025 record level of FIDs and in fact, the FIDs of this year have not been ordered yet, and I still expect today those ships to be ordered in the coming 2 to 3 years with the usual pace. So yes, I would not be surprised if the implication of that would be good quarters in the coming year. So that's is mechanical. But I cannot guide on a specific level or normalized level quarter-by-quarter, in particular, in the current context because some orders could shift from one quarter to another and that would have no material implications regarding our medium-term business model. Regarding the need for more diversification and more buffers. We know talking directly to governments in Asia, just come back from Asia. We know that when we talk to the Indians, for instance, we know that there would be more buffers from those countries, meaning more storage -- this is clear. So there will be more floating storage and more onshore storage, more strategic storage of LNG in the region, but also a need to diversify the sources of gas. If you take a country like India, 60% of the Indian gas is coming today from the Middle East. It's, of course, a situation that must be controlled with the more buffers, but also with more diverse routes. And so that implies a number of additional ships to be ordered over the medium term, that is our assessment today. And it's -- this effect is material. So it's not marginal effect on the overall volume of ships. No, can I revise the overall estimate of how many ships will need to be ordered over the next decade. We, of course, have an idea, but it would be not cautious for us to release the figure today in the midst of the crisis in the Middle East. And so we will do it most likely, I believe, in the first half of next year when the crisis is over and when the situation is completely stabilized because we are looking at the long-term question.

The next question is from Henri Patricot of UBS.

Two questions from my side. The first one, following up on LNG as a fuel. Just wondering if you can give some comments on the outlook for orders for this year? I mean you mentioned that you're in the middle of revamping your offers to start to imply that we shouldn't expect many orders this year, perhaps more coming next year? And then secondly, to follow up on the comments on the long-term outlook. Do you have any concern that the current events and disruption to LNG flows coming quite soon after the disruption that we saw back in 2022 with the Russia-Ukraine war could have a negative impact on the long term on energy demand as a few perhaps not seen as reliable as we were, it could be for some of the buyers?

Thank you. We are working on a good number of projects for LNG as a fuel as we stand today. So we have a good technology which many shipyards can use. And so we are working very actively. What is true is that we would like to increase the penetration further because we know that in the majority of cases, LNG as a fuel can be used with a membrane containment system, which is not our historical market share. So it is more, let's say, a plan to win aggressively market share in this area. And yes, of course, I expect an acceleration of the sales between this year and next year and the year, and the year after. So yes, that's totally true. Second, regarding the long-term outlook -- for me, the question is less the question of LNG that it is the question of investments in the Middle East. The Middle East in general has been seen as a lever and as a very safe place to invest not only for Energy, but also in a couple of other areas. It's clear that people will take a buffer when they source energy from the Middle East, not only gas, but what we tried to show in the presentation is that, in fact, the largest dynamic that we see in the coming years is indeed coming from the U.S.A. And so we see that the implications, the overall implications of the situation can be a much more diverse source of LNG, much less concentrated clearly, no countries buying 100% of their gas from a single country, whatever is this country but also longer shipping routes and more buffers. This is our situation now. I have not heard of any country in particular in Asia, which is the largest dynamic in the month that they are thinking about not investing anymore in gas. That's not at all the situation today. It's not the situation.

The next question is from Jamie Franklin of Jefferies.

Just one left from me. So if I look your order intake through the first quarter, obviously, about half of those were announced prior to Middle East conflict escalation about half after that during March and onwards. But presumably, a lot of these were already in advanced stages of discussion prior to the conflict. Could you help us give us -- get a sense of kind of how many of the 1Q orders were from discussions that started post conflict? Or in other words, have you seen any sort of acceleration or deceleration in inquiries from new orders?

It's a good question. The majority of those orders, of course, have been discussed for a couple of weeks or a couple of months. In fact, so the cycle for us is long and we don't see any deceleration of the discussions regarding the pace of orders. And so we don't expect the slowdown of orders in the coming quarters.

[Operator Instructions] The next question is from Jean-Luc Romain of CIC CIB.

I got 2. The first is about the adoption of new technology. In light of the evolving needs of your customers and to clients, do you see this technology as possibly adopted faster. And second question is regarding the map you show on Slide 10, I don't take it soon. I didn't saw Russia, but I think -- I guess it's over for yourselves. So just one question.

Okay. So over the medium term, thank you for your question. Over the medium term, what we believe is that if we have longer routes of shipping and in general, longer storage, and people will invest in general on systems with a low boil-off rate. And as you know, next one has been developed as a platform, in fact, to reach a very, very low levels of boil-off. So we believe that the overall environment is conducive to an acceleration in -- of low boil-off rate systems, including next one.

The last question is from Jean-Francois Granjon of ODDO BHF.

I probably already answered to my 2 questions. Nevertheless, I will come back on the first one on the Middle East, taking into account the situation. Do you expect a slowdown for the future FID, I think for the ship owner, it's not very interesting to point to invest immediately on this -- on the new vessel, on new LNGCs. So do you expect some potential risk to see a slowdown for the future orders with probably lower FIDs from the Middle East area? And the second question, I will come back on the LNG as a fuel. You mentioned in the press release some more and more competition. So could you explain more or give us some more color about that? What do you expect and you consider that this will be more and more difficult to develop your own technology [ member ] and technology? And are you more cautious regarding the trend expected for your business in this market?

So thank you for your questions. On the Middle East, what I think is important to see is that, of course, for, let's say, consumers of LNG, in particular, in Asia Pacific, but also from the Middle East perspective, it is a crisis, but for other continents, in particular for the U.S. and for exporters of LNG, which are not in the Middle East this crisis is very unfortunately, but it is an opportunity. And so if anything, we don't see at all a slowdown of orders of LNGC, we don't anticipate it from the [indiscernible] if you want. We also don't participate to slow down in FIDs from the non-Middle East part. They will be in the short-term volatility and uncertainty regarding everything that comes out of the Middle East. Meaning FIDs, but also LNGC orders perhaps in the very short term. But beyond those short-term effects, what we anticipate is that it will be more than compensated by additional investments outside of the Middle East. Regarding your second question, LNG as a fuel. Well, I think what I think is, first of all, the trend towards LNG as a fuel will continue for, again, primarily for environment concerns, but also because it's the -- it has really become the fuel of choice for large container ships and for cruise ships. So I don't expect any disruptions in this trend. But what we also believe is that for many reasons, but including because of rising labor costs, lower labor availability, lower qualified labor availability. We must industrialize our membrane containment systems more to bring them in, let's say, more easy to do business with directly to the yards which is something that GTT has not done historically. We have been a little bit shy at providing solutions in the turnkey fashion in a prefab fashion together with partners. And this is the core of what we are working on. And I have absolutely no doubt that and from my experience in the yard, I have no doubt about the fact that by making our solutions easier to do -- to use directly in the yard we will increase the penetration of our solution. So I'm optimistic regarding this market.

And there are no more questions at this time.

Thank you. Thank you all for your various questions and for your attention. We look forward to continuing the discussions with you and to seeing you soon.

Ladies and gentlemen, thank you for joining. The conference is now over, you may disconnect your telephones. Thank you.