Technip Energies N.V. ($TE)

Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Technip Energies First Quarter 2026 Financial Results Conference Call. [Operator Instructions] At this time, I would like to turn the conference over to Phillip Lindsay, Head of Investor Relations. Please go ahead, sir.

Thank you, Maria. Hello, and welcome to Technip Energy's financial results for the first quarter of 2026. On the call today, our CEO, Arnaud Pieton, will discuss our Q1 performance and business highlights. This will be followed by a financial review by CFO, Bruno Vibert. Arnaud will then return for the conclusion before we open for questions. Before we start, I encourage you to take note of the forward-looking statements on Slide 3. I will now pass the call over to Arnaud.

Thank you, Phillip, and a very warm welcome to our first quarter results presentation. Let me start by sharing the key highlights of our performance. First, a comment on the situation in the Middle East. I want to reassure you that all our projects under construction are intact; no damage to the work, and no cancellation. And more importantly, everyone is safe. Of course, we have faced operational disruptions stemming from the conflict, but our first quarter results underscore the resilience of Technip Energies. Owing to the adaptability and unwavering commitment of our teams, we limited the revenue impact to just a 4% decline year-over-year, with EBITDA down 8%. Importantly, our robust underlying cash generation continues to set us apart. Despite the challenges, we successfully converted nearly 90% of our EBITDA into free cash flow this quarter. This achievement reflects the quality and breadth of our order intake over the past few years and our focus on operational excellence. The situation in the Middle East remains fluid and is expected to affect our 2026 financial outlook. I will provide further details in the next slide, while Bruno will later discuss our new conditional guidance. On the commercial front, the first quarter marks one of the strongest periods for order intake in our history, with more than EUR 6 billion of new awards. These significant wins reinforce our leadership in LNG and sustainable fuels, and we have driven our backlog to a new high of more than EUR 20 billion. Let's now take a look at the operational, financial, and broader implications of the Middle East situation. First, we stand in solidarity with all those affected by the conflict. From its outset, Technip Energies implemented a comprehensive crisis management framework to safeguard our global workforce and protect our contractual positions. Some of our work sites experienced temporary stoppages followed by phased resumptions under enhanced safety protocols, working at all times in coordination with authorities and customers. Currently, our sites are nearing full mobilization. While the situation in the Middle East remains fluid, we see two main channels of impact on our business. First, project execution, where progress has been affected by site disruptions and logistical challenges, deferring revenue into later periods. Second, incremental costs are being incurred for safety and business continuity. While we expect cost recovery through strong contractual protections, the exact timing and extent are dependent upon the evolution of the conflict and the progress of commercial discussions. For these reasons and assuming the situation in the Middle East normalizes by the end of the second quarter, we have recalibrated our backlog schedule and estimate that around EUR 500 million to EUR 600 million in revenue will be deferred beyond 2026, while the impact on projects' margin should be substantially mitigated. A supply shock of this magnitude reinforces 3 structural trends we are already seeing in our markets - diversification of supply routes, diversification of energy sources, and a greater premium on security of supply. In practical terms, energy security drives stronger investment in energy infrastructure and new energies. It translates into more upstream investment, additional LNG capacity, and increasingly floating LNG solutions to accelerate time to market. It also elevates the value of resilience through circularity, regionalization of supplies, and solutions that improve sovereignty and supply certainty. In this environment, Technip Energies has a critical role to play, helping customers progress energy security while continuing to deliver decarbonization. In addition, T.EN will also very likely be active on Middle East asset reconstruction given our pertinence in the region and our proximity to customers. Supported by the continued execution of our strategy, our financial strength, and our global presence, Technip Energies is exceptionally well-positioned to navigate the current uncertainty and to thrive in the years ahead. Now let's look at our near-term commercial momentum with 2026 off to a strong start. We achieved considerable commercial success in the first quarter with more than EUR 6 billion of awards, exceeding our total order intake for the whole of 2025. Key wins included an award for Europe's first greenfield sustainable aviation fuel plant for SkyNRG in the Netherlands, further confirming our leadership in SAF, where we have delivered around 60% of the global capacity. And in LNG, we reinforced our position through two additional megatrends for Qatar Energy's North Field West project, a further tranche of work to advance Coral Norte FLNG in Mozambique, and a substantial limited notice to proceed with Commonwealth LNG in the U.S. These awards have materially strengthened our backlog to a new high of more than EUR 20 billion, reinforcing our medium-term growth outlook. And furthermore, our near-term commercial pipeline remains buoyant. We anticipate an additional EUR 6 billion of new orders in the coming months, further diversifying our exposure outside of the Middle East and with potential to drive our media backlog to above EUR 24 billion, some 50% higher versus the start of the year. In summary, our selectivity-built backlog continues to strengthen with high-quality new awards underpinning our growth outlook beyond 2026. Before passing to Bruno, let me give you now an update on Reju's progress in building a circular textiles ecosystem. Reju combines the agility of a start-up with Technip Energies' resources and execution capabilities to convert the challenge of post-consumer waste into an economically viable venture. Since our last market update a year ago, Reju has progressed across the key work streams required to move from concept to execution, technology maturation, site selection, funding and working towards securing vital pathways for feedstock and uptake. Reju's development is also supported by a more constructive regulatory backdrop, notably through Europe's extended producer responsibility or ETR, framework. For many months, we have been producing at Regeneration Hub Zero, our demo plant in Frankfurt. The product, Reju polyester and Reju yarn has been provided in tons to leading brands for testing and validation. And we are putting in place certification to confirm end-to-end traceability from textile waste to Reju polyester. We have preselected three sites, two in Europe and one in the U.S. for what would be industrial scale facilities. Importantly, in March, Reju was awarded EUR 135 million in Dutch NIKI funding for its first plant, an important external validation of the technology and our team. The grant is a meaningful step on the path to a final investment decision potentially later this year or early 2027. As we move forward, we remain disciplined. Key priorities include finalizing long-term feedstock agreements to derisk input supply and securing multiyear offtake agreements for Reju rPET. Finally, we are focused on ensuring the business model. It needs to deliver accretive financial returns, and it needs to enhance Technip Energies' quality of earnings over time. I will now pass the call over to Bruno.

Thanks, Arnaud. Good afternoon, everyone. Let me take you through the standpoints of our financial performance for the first quarter presented on an adjusted IFRS basis. Revenues were EUR 1.8 billion, down 4% year-over-year, showcasing our ability to remain resilient amid foreign exchange headwinds and ongoing conflict in the Middle East. Lower revenues, together with additional costs incurred for safety and business continuity in the Middle East, resulted in EBITDA falling by 8% to EUR 149 million. EBITDA margins declined by 40 basis points compared to last year, reflecting the challenges described and an absence of notable milestones in the broader portfolio. Diluted EPS came in at EUR 0.48, a decrease of 14% year-over-year, primarily driven by the EBITDA trend, lower net financial income and increased nonrecurring items, particularly those related to the positive development of Reju. Free cash conversion from EBITDA, excluding working capital and provisions, stood out at a robust 89%, which is especially impressive given the operational disruption we faced in the Middle East. Finally, on the commercial front, we secured more than EUR 6 billion in new awards. This achievement positions us for what should be our strongest year ever for order intake. In summary, I want to commend our teams for delivering a resilient first quarter in testing circumstances. So, let's turn now to our segment reporting, beginning with Project Delivery. Revenue for the segment reached EUR 1.4 billion, representing a 4% decline year-over-year. While we saw planned growth in LNG and decarbonization projects in the U.S. and Europe, this was offset by two main factors. First, foreign exchange, where a significant strengthening of the euro against the U.S. dollar, reaching EUR 1.17 this quarter compared to 1.05 in Q1 last year, created a substantial headwind. Second, Middle East. As a direct result of the conflict, project execution in the Middle East experienced local logistical challenges and site disruptions impacting our progress. Combined, those two factors constitute a revenue headwind for the quarter of around EUR 200 million. Adjusted recurring EBITDA for Q1 reduced by 80% year-over-year, landing at EUR 94 million. EBITDA margin was 7%, down 110 basis points compared to last year, largely due to additional safety and business continuity costs associated with Middle East projects. The remainder of our portfolio performed on plan, albeit without any meaningful project milestones. Finally, our backlog stands at a robust EUR 18.7 billion, equivalent to 3.5x 2025 segment revenues, providing excellent visibility going forward. As Arnaud outlined earlier, our commercial pipeline positions us well to reinforce this backlog with high-quality prospects to support our medium-term performance. Now, let's focus on Technology Products and Services. TPS revenues were 2% lower year-over-year, mainly due to foreign exchange headwinds and reduced contribution from ethylene equipment. However, this was partially offset by strong progress on the CO2 absorber for the Net Zero Teesside, solid services volumes and an initial contribution from AM&C. At constant exchange rates, revenues would have shown modest year-over-year growth. Recurring EBITDA margins were extremely robust, rising to 15.3%, an improvement of 80 basis points year-over-year and driving EBITDA up 4% to EUR 68 million. Segment margins were enhanced by strong execution on proprietary product contracts, improved profitability in consultancy and services, and the contribution from AM&C. As we expect the quarterly run rate in revenue to pick up in the balance of the year, margins may normalize closer to our full year guidance. TPS orders for the quarter totaled EUR 353 million. Secured work was primarily services based, covering a broad range of studies, services and PMC call-offs as well as the contract to provide our reformer technology to a hydrogen project in Africa. Looking ahead, we see positive award momentum for services, products and our equipment. At period end, the TPS backlog was close to EUR 1.5 billion, in line with recent trends. Let's now review other key financial metrics, starting with the income statement. Corporate costs totaled EUR 13 million, marking a significant reduction year-over-year. This figure aligns closely with our underlying corporate cost run rate. Just as a reminder, Q1 2025 included additional French social charges relating to long-term incentive plans. As a point of note, there is no impact of ESOP 2026, our employee share ownership program in Q1 2026. However, once implemented, this non-cash item will, on the face of the P&L, increase full year corporate costs, potentially pushing them to the upper end or even above our guidance range. Net financial income remains healthy at EUR 21 million, albeit with a downward trend year-over-year because of lower global interest rates. Lastly, on the P&L, at 28.3%, the effective tax rate is consistent with the 2026 guidance range. Turning to our balance sheet. Our financial position remains exceptionally strong, a true point of differentiation for T.EN. Gross cash reached EUR 4.2 billion and is significantly in excess of the net contract liability of EUR 3.6 billion. The combination of projects already in backlog and anticipated awards through 2026 and beyond will further reinforce this robust capital structure. Finally, gross debt has decreased compared to year-end levels, following a period of normalization after the AMC acquisition last December. Let's now focus on our cash flow performance for the quarter. Free cash flow, excluding working capital and provisions, reached EUR 132 million with a solid 89% conversion from EBITDA. This result underscores our strong operational execution and the benefit of positive net financial income. Looking forward, we anticipate maintaining free cash flow conversion within the 70% to 85% range. In terms of working capital, we saw a significant inflow of EUR 273 million as customer payments were received, and the reversal of some specific factors from the prior quarter. It's worth noting that working capital remains uneven, largely due to the nature of our long-cycle project delivery segment. On the financing side, we repaid EUR 75 million in short-term debt and have initiated our EUR 150 million 2026 share repurchase program. We closed the period with EUR 4.2 billion in cash and cash equivalents, our highest position since company's inception. Before handing the call back to Arnaud, I'd like to outline our new conditional segment guidance. For context, this conditional guidance incorporates the year-to-date operational performance, factoring in the latest insight from April and assumes the conditions in the Middle East will normalize by the end of the second quarter. As Arnaud has mentioned, despite the world disruption to normal workflows and productivity, our projects in the region are progressing. At present, all projects have enough work fronts to maintain near-term momentum. Some sites have all the resources required for this to continue through to completion, while others depend more on the timely arrival of both materials and equipment typically shipped through the Strait of Hormuz. Within this conditional guidance, we assume the strait will fully reopen by the end of Q2, although we can take advantage of alternative logistic solutions for many projects. Its extended closure remains a primary risk to efficient project execution as not all equipment are truckable. Given these assumptions, our updated expectations is for project delivery revenues to be within a range of EUR 5.7 billion to EUR 6.3 billion, which even at the low end, still indicates the year-over-year growth. Thanks to strong contractual protection, the impact on project margins should be substantially mitigated. We may, however, incur incremental costs for safety, business continuity and the outcome of commercial negotiation. Therefore, we now anticipate EBITDA margins being in the range of 6.5% to 7.5%. At this early stage, we've taken a relatively conservative stance in this projection, notably in terms of contingencies. Technology Products and Services is comparatively insulated from situation in the Middle East, though some consulting and services contracts in the region may be affected. Accordingly, we are widening the revenue range to EUR 1.9 billion to EUR 2.2 billion, lowering the bottom end while retaining the top end. Our margin expectation for TPS is unchanged, bolstered by a strong first quarter. All other guidance items are unchanged. Looking beyond 2026, based on the quality of our backlog, our contractual discipline and our commercial opportunity set, our medium-term trajectory remains firmly intact, and we expect a meaningful recovery in the coming years. I'll now turn the call back to Arnaud.

Thank you, Bruno. So, to conclude, we delivered resilient first quarter revenue and EBITDA despite operational disruption linked to the Middle East conflict. And we've maintained robust cash generation. Commercially, we had an excellent quarter, securing more than EUR 6 billion of awards that strengthened our backlog to record levels and reinforced our outlook. And looking ahead, Technip Energies is uniquely positioned to serve both oil and gas-based economies as well as energy importing regions that are shifting towards lower carbon systems. Our priorities are clear: execute safely and reliably while protecting margins through disciplined project and contract management, continue to build a diversified pipeline that supports sustainable growth, and deliver on our strategy to enrich and grow our TPS portfolio, deploying capital to enhance our differentiation and quality of earnings. Before closing, a final point. Since inception, Technip Energies has successfully navigated through numerous challenges and crises, always demonstrating tenacity and resilience. Each time, we have emerged stronger and more united. Today, we are approaching the current situation with the same determination and forward-looking spirit while actively preparing the group for the future and the opportunities that lie ahead. With that, we can now open for questions.

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

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

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

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

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

The next question is from Alejandra Magana of JPMorgan.

On the new conditional 2026 guidance, does this revised range already reflect the full set of mitigation options currently available such as alternative logistics routes? And if this disruption extends beyond the end of 2Q, how should we think about the incremental impact versus what is already embedded in the full year guidance? Would it be broadly linear? Or could it become more or less severe over time?

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

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

Yes, absolutely, and Bruno will take this one.

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

The next question is from Richard Dawson of Berenberg.

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

So, starting with your second question. Yes, we do have the capacity to support Qatar Energy in their repair effort for the train #4 and #6, which has been touched or damaged. To that effect, we mobilized a dedicated team. It has been in agreement with our clients. It's been decided that it was extremely important to them, to not tap into the resource pool made available on NFE and NFS and as we are also mobilizing on NFW for the repair work. So, we have a dedicated repair team that is separated from the NFE, NFS and NFW teams. And the scope that will be secured through the repair work will come in addition to the scope that is already secured. And as you rightly pointed out, because we have quite a bit of work in Qatar already, it may be that there we favor other contracting schemes than the traditional ones, which historically have been more towards the lump sum turnkey. In this case, we may be more towards form of PMC and services and reimbursable and EPCM. So that is still under discussion, but we will, the answer to your question is dedicated team. Yes, we have the capacity to handle. And three, the contracting scheme may be a little bit different in order to address, I would say, the level of exposure we already have in country. But the important thing, and I repeat what I said earlier, is to be by our client side and to be a force of proposition and solution seeking and solution finding, and there's quite a good dynamic from what I can observe, and a lot of reactivity and the pace is actually quite strong on this one. So now about the EUR 500 million to EUR 600 million shifting from 2026 revenue into subsequent years. Well, part you will see coming maybe as an addition to 2027, but part also will go probably into beyond 2027 because when you have, you take a project like NFE, for example, well, the trains that were supposed to be delivered that were imminently being delivered, well, they shifted a little bit to the right. And we are working with our client to actually see what can be done for accelerating the delivery of those and also mitigating the impact on the subsequent trains. So, it's not, it won't be an automatic adder to 2027. You may have some, I would say, spilling over 2028 as well to some extent. What I can describe nonetheless, from what is happening on the field is a strong appetite by our client to, I would say, accelerate and secure the delivery of the trains at the soonest. And so, the motivation and the engagement by the teams and our clients' team is super strong to execute with pace while executing safely. But there will be, yes, some spillover in '27 and maybe a bit of leftover into '28. That's what I can picture at the moment.

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

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

So, I'll take this one.

I think it's a question for Bruno.

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

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

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

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

So far, it's not a controlling stake at all, and that's not the purpose. So, we are not also a financial investor. So, it gives us an ability to really become a partner for this project. Of course, for this kind of product, we have all the relevant technologies from carbon capture to, of course, green H2 and so on. So, we are a bit of a natural partner of choice. But we are also ready to take commitment. And through the work that we start to do on adjacent business models, I think this fits nicely with that to be, for us to be able to partner to bring value on both sides, not to buy a project, but really to be able to add value on both fronts, also to learn from those reputable and very experienced operators. So that gives us a better insight on the market. That potential really means that we derisk and we retain more value and it maybe helps unlock some of these projects. So, a bit of a triple win-win situation.

The next question is from Mick Pickup, Barclays.

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

We see, I mean, let's be honest, for us, we see, I would say, the same level of interest for the alternative molecules or energy sources out of the Middle East. Notably India, where we are already present because we are executing a project with, and for Greenko over there. And yes, we see, I would say, where there may have been a bit more hesitation in the past around the second tranche of the project. We see maybe a bit of a renewed energy and interest for tranche #2. And now it's not a tsunami of new inquiries related to those new molecules. But we do have, yes, some positive vibes from some regions around that. But it's also true for more LNG, more floating LNG. And if it's not necessarily totally new, those, I mean, the inquiries and the, I would say, the pace and the guidance in the dialogue is related to existing opportunities such as Abadi and others. But the, if I may give a bit of an opinion regarding what this current situation should trigger. I think you can imagine a scenario with three acts. One, it's about reconstruction in the Middle East, and we will be part of it in a way or another. For me, a second act could be and maybe will be, we'll see the GCC countries deciding to act to reshape a bit the export routes, and that should be and could be the opportunity for some of us to be part of building an alternative infrastructure. And then maybe a third act for, in the rest of the world, excluding the U.S., which is oil and gas rich, a bit of a race to diversification of supply, a bit of a reshoring driven by national security agendas and creating some spare on supply and capacity beyond the strategic reserves that every country has. So that calls upon more regionalization, more regional supplies. It means that circularity should have a bright future as well. And we'll be part of all that. Now let's be frank, and we are always honest on this call. Like I said, it's not a tsunami of new inquiries, but I would say, renewed energy in the conversations around those topics.

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

So, I've learned through the Reju venture that the textile industry, but also other industries that are, have been using polyester for some years now or decade. Well, it's, for them to move from other types of material to polyester, but it has taken some time, and they've had their share of pain actually moving from the past solution to the polyester solution. So here, we're not changing the, we are still remaining with the polyester, but the brands have, I would say, incompressible qualification program for any new material. So, it remains a polyester, but it's a polyester that is from a different source. And therefore, the testing program is kind of incomprehensible. Before they will commit to move from joint development agreements of JDAs to firm purchase orders for a large quantity of material. So, we are in the middle of the qualification process with some of those brands at the moment. We will have the outcome of their trials, I would say, within Q3. And then we're hoping for the signing of firm orders later in the year or early in 2027. That's what's missing because the rest, from the technology to the feedstock, looks like we've built an ecosystem that is pertinent. The certified traceability is getting there as well. And the funding certainly, I would say, guarantees and strengthens the commercial nature of the venture. Therefore, it will be a profitable venture. So, it's mostly around signing the offtake agreement, for which we are waiting for the completion of the qualification programs with the brands. But so far, so good.

The next question is from Kate O'Sullivan, Citi.

So, you completed the first major acquisition last year. Reflecting back now, what have been your key learnings from the AM&C transaction? And how is the integration progressing? And just on the M&A to grow the TPS division, what adjacencies are most interested in at the moment?

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

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

The last question is from Bertrand Hodee, Kepler Cheuvreux.

I have two questions. The first one is: I wanted to understand a bit more about the 100 basis point decrease in EBITDA margin in project delivery. I noticed that Bruno used 2x or 3x the absence of milestones in Q1, whereas my understanding is that you were very close to handing over the Bahrain work. So that may have had an impact. And also, the delivery of the first train in Qatar will have been pushed back. So, to make this question shorter, sorry for that. I wanted to understand how much is, between this 100 basis points decrease, and how much is the milestone being pushed beyond '26? And what is the other, probably pure cost? And then I will have a second question, probably.

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

So, on the 100 basis points, of course, first, you have a natural effect as you decrease your top line, you have your direct gross margin contribution from projects. You have some fixed costs on SG&A. So, you have a bit of a natural impact that would come with that. Second would be around milestones and incremental cost, which, taking or staying on the metaphor of Arnaud, could be left in our P&L. That's the second part of that. As Arnaud mentioned, what was in the assumptions for Q1, how we closed, and now we established guidance, we've absolutely taken a position and a stance where we would not put at risk any of the future margin profile. So, this we've reflected basically assumptions. Yes, not accelerating the recognition for the project or accelerating milestones or expecting for the best, we haven't taken this kind of somewhat bullish or aggressive position and stand to close Q1 and/or to provide for a 100 basis point kind of adjustment.

Okay. And the second question is, when I look at the current environment and also Trump's model of U.S. energy dominance and so on, and also given the location of Canada, I see more and more momentum on the Canadian LNG project as or LNG. Are you looking at those opportunities? Or are you involved in either an early-stage or more mature FEED study over there?

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

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

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