9M 2022 Adj. revenues of €4.9bn and Adj. recurring EBIT margin of 6.9%; Adj. diluted EPS +42% Y/Y
Return to full company guidance for 2022: Adj. revenues of €6.2 – 6.5bn and Adj. recurring EBIT margin of 6.7% – 6.9%
Significant TPS order intake drives step-change in segment backlog: +60% Y/Y
Macro energy environment driving an improved commercial outlook notably in LNG and decarbonization
PARIS–(BUSINESS WIRE)–Regulatory News:
Technip Energies (Paris:TE) (ISIN:NL0014559478) (the “Company”), a leading Engineering & Technology company for the energy transition, today announces its unaudited financial results for the first nine months of 2022.
Arnaud Pieton, Chief Executive Officer of Technip Energies, commented:
“The world requires an energy system that balances affordability, availability, and sustainability. Recent events have underlined the urgent need for increased investment and accelerated project development, with a particular emphasis on natural gas, LNG, and low-to-zero carbon solutions.”
“For our company, this market reality is first evidenced by strong TPS order intake driving a 60% step change in segment backlog year-over-year, with notable awards in renewable fuels and ethylene markets – this reinforces the revenue growth trajectory of our highest margin segment. Furthermore, the commercial pipeline for Project Delivery is also growing with substantial early engagement in energy transition and traditional prospects. As such, we expect a significant improvement in order intake trends over the next 12-18 months. This also confirms that the combination of longer cycle Project Delivery with value accretive TPS provides an ideal blend for T.EN to be successful across energy cycles.”
“In the third quarter, our teams continued to demonstrate robust business execution and our revenues excluding Arctic LNG 2 increased as planned. The strength in margins, which are in line with our medium-term trajectory, demonstrates the quality of our underlying portfolio, an improving mix, and world-class project delivery.”
“Our orderly exit from Arctic LNG 2 is progressing and all operational personnel have been demobilized from the project. We have signed an Exit Framework Agreement with our customer, which we are currently implementing, and anticipate completing this process within the first half of 2023. The improved visibility on Arctic LNG 2 combined with nine months of achieved financials has enabled us to return to full company guidance for 2022.”
“T.EN’s business strategy is fully aligned with an improving energy market outlook. Supported by our strong balance sheet and commitment to further investment in our technology portfolio, we are well positioned to enable solutions for affordable, available, and sustainable energy. We remain resolutely focused on generating value for our shareholders through effective capital allocation and sustained excellence in execution.”
Key financials – adjusted IFRS
(In € millions, except EPS)
9M 2022
9M 2021
Revenue(1)
4,862.2
4,909.9
Recurring EBIT(1)
335.9
307.5
Recurring EBIT margin %
6.9%
6.3%
Net profit
222.9
159.7
Diluted earnings per share(2)
€1.25
€0.88
Order intake
2,726.6
8,404.1
Backlog
13,500.9
16,464.2
Financial information is presented under adjusted IFRS (see Appendix 8.0 for complete definition). Reconciliation of IFRS to non-IFRS financial measures are provided in Appendix 1.0, 2.0, 3.0.
(1) 9M 2022 adjusted revenue and recurring EBIT included €989.8 million and €68.1 million respectively from Arctic LNG 2.
(2) 9M 2022 and 9M 2021 diluted earnings per share have been calculated using the weighted average number of outstanding shares of 178,668,195 and 181,903,344 respectively.
Key financials – IFRS
(In € millions, except EPS)
9M 2022
9M 2021
Revenue
4,786.2
4,750.0
Net profit
204.1
167.9
Diluted earnings per share(1)
€1.14
€0.92
(1) 9M 2022 and 9M 2021 diluted earnings per share have been calculated using the weighted average number of outstanding shares of 178,668,195 and 181,903,344 respectively.
2022 full company guidance – adjusted IFRS
Full company guidance is consistent with prior financial framework for FY 2022. The prior framework excluded the contribution from Arctic LNG 2 and consisted of adjusted revenues of €5.0 – 5.5 billion, adjusted recurring EBIT margin of at least 6.8%, and adjusted effective tax rate of 28% – 32%. The full company guidance stated below now includes the expected contribution from Arctic LNG 2.
Revenue
€6.2 – 6.5 billion
Recurring EBIT margin
6.7% – 6.9%
Effective tax rate
28% – 32%
Financial information is presented under adjusted IFRS (see Appendix 8.0 for complete definition). Reconciliation of IFRS to non-IFRS financial measures are provided in Appendix 1.0, 2.0, 3.0.
Conference call information
Technip Energies will host its 9M 2022 results conference call and webcast on Thursday, October 20, 2022 at 13:00 CET. Dial-in details:
France:
+33 170918704
United Kingdom:
+44 121 281 8004
United States:
+1 718 7058796
Conference Code:
77709
The event will be webcast simultaneously and can be accessed at: https://edge.media-server.com/mmc/p/uuw25hqj.
About Technip Energies
Technip Energies is a leading Engineering & Technology company for the energy transition, with leadership positions in LNG, hydrogen and ethylene as well as growing market positions in blue and green hydrogen, sustainable chemistry and CO2 management. The Company benefits from its robust project delivery model supported by an extensive technology, products and services offering.
Operating in 34 countries, our 15,000 people are fully committed to bringing our clients’ innovative projects to life, breaking boundaries to accelerate the energy transition for a better tomorrow.
Technip Energies is listed on Euronext Paris with American depositary receipts (“ADRs”) traded over-the-counter in the United States.
Operational and financial review
Order intake, backlog and backlog scheduling
Adjusted order intake for 9M 2022 of €2,727 million, equivalent to a book-to-bill of 0.6. Orders in the third quarter included a large ethylene contract for INEOS’ Project One cracker in Belgium, a significant contract for Neste renewable products refinery expansion in Rotterdam, an EPCC contract for YURI green hydrogen project in Australia, a FEED contract for Papua LNG upstream production facilities, a FEED contract for Gray Whale 3 floating offshore wind project in South Korea as well as other studies, services contracts and smaller projects.
The first half included notably a large EPC contract by Hafslund Oslo Celsio for the world’s largest full-scale waste-to-energy plant with carbon capture in Norway, a significant EPCC contract by PETRONAS Chemicals Fertilizer Kedah for a melamine plant with minimized CO2 footprint, a carbon capture & storage expansion at ExxonMobil’s LaBarge facility in the USA. Book-to-bill on a trailing 12 month basis is 0.6.
Adjusted backlog decreased by 18% year-over-year to €13,501 million. The company’s orderly exit from Arctic LNG 2 progressed in the third quarter of 2022 with an Exit Framework Agreement signed with the client. In light of this, the remaining backlog on the project has been reassessed in the period. At September 30, 2022, adjusted backlog includes €890 million associated with Arctic LNG 2.
(In € millions)
9M 2022
9M 2021
Adjusted order intake
2,726.6
8,404.1
Project Delivery
1,235.7
7,478.3
Technology, Products & Services
1,490.9
925.8
Adjusted backlog
13,500.9
16,464.2
Project Delivery
11,704.2
15,342.0
Technology, Products & Services
1,796.6
1,122.2
Reconciliation of IFRS to non-IFRS financial measures are provided in Appendix 6.0 and 7.0.
Adjusted backlog at September 30, 2022, benefited from a foreign exchange impact of €1,022.8 million.
Adjusted backlog at September 30, 2022, included €889.6 million associated to Arctic LNG 2.
At September 30, 2022, adjusted backlog excluding the proportion related to Arctic LNG 2 amounted to €12,611 million. The table below provides estimated backlog scheduling as of September 30, 2022.
(In € millions)
2022 (3 M)
FY 2023
FY 2024+
Adjusted backlog excluding Arctic LNG 2
1,382.7
4,478.2
6,750.3
Company financial performance
Adjusted statement of income
(In € millions, except %)
9M 2022
9M 2021
% Change
Adjusted revenue
4,862.2
4,909.9
(1) %
Adjusted EBITDA
415.9
389.5
7%
Adjusted recurring EBIT
335.9
307.5
9%
Non-recurring items
(2.8)
(31.1)
(91) %
EBIT
333.1
276.4
21%
Financial income (expense), net
(7.2)
(18.6)
(61) %
Profit (loss) before income tax
325.9
257.9
26%
Income tax (expense)/profit
(97.6)
(87.8)
11%
Net profit (loss)
228.3
170.1
34%
Net profit (loss) attributable to non-controlling interests
(5.4)
(10.4)
(48) %
Net profit (loss) attributable to Technip Energies Group
222.9
159.7
40%
Business highlights
Project Delivery – adjusted IFRS
(In € millions, except % and bps)
9M 2022
9M 2021
% Change
Revenue
3,895.6
3,995.5
(3)%
Recurring EBIT
279.2
254.7
10%
Recurring EBIT margin %
7.2%
6.4%
80 bps
Financial information is presented under adjusted IFRS (see Appendix 8.0 for complete definition).
9M 2022 Adjusted revenue decreased by 3% year-over-year to €3.9 billion. Revenues included significantly lower activity on Arctic LNG 2, which contributed €989.8 million of revenue compared to €1,758.3 million in 9M 2021. Revenues excluding Arctic LNG 2 increased year-over-year by 30% due to the ramp-up of major LNG and downstream projects.
9M 2022 Adjusted recurring EBIT increased by 10% year-over-year to €279.2 million. The contribution from Arctic LNG 2 was €68.1 million, compared to €60.7 million in 9M 2021. Excluding the contribution from Arctic LNG 2, Adjusted Recurring EBIT was €211.1 million, representing year-over-year growth of 8.8%. 9M 2022 Adjusted recurring EBIT margin has increased year-over-year by 80 bps to 7.2% due to solid execution, including a strong contribution from LNG and downstream projects in the latter stages of completion. This was partially offset by earlier stage LNG projects. Adjusted Recurring EBIT margin excluding the contribution from Arctic LNG 2 was 7.3%.
Q3 2022 Key operational milestones
(Please refer to Q1 2022 and H1 2022 press releases for first half milestones)
Qatar Energy North Field Expansion (Qatar)
Ramp-up of civil construction activities at site and of equipment/material deliveries.
Eni Coral Sul FLNG (Mozambique)
Start-up activities ongoing.
Sempra LNG Energía Costa Azul (Mexico)
First steel structure received and all heavy equipment shipped to site.
Energean Karish Gas Development (Israel)
Approval received from Israeli Ministry of Energy to start the flow of gas.
bp Greater Tortue Ahmeyim FPSO (offshore Senegal / Mauritania)
FPSO Completion celebration ceremony took place at the COSCO yard in Qidong, China. No significant damage identified to date following typhoon Muifa
MIDOR Refinery Expansion Project (Egypt)
Construction completion of cooling tower, start-up of first utility production unit.
HURL Barauni and Sindri Ammonia/Urea projects (India)
Mechanical completion certificates received for Ammonia/Urea plants at both Barauni and Sindri sites. Start-up/commissioning activities started at both sites.
Borouge IV Ethylene project (UAE)
Orders placed for long lead items. Civil work started on site.
Q3 2022 Key commercial highlights
(Please refer to Q1 2022 and H1 2022 press releases for first half highlights)
Yuri Green Hydrogen Project (Australia)
As leader of the consortium with Monford Group, awarded an EPCC contract by Yuri Operations Pty Ltd, to develop Project Yuri Phase 0, which is a green hydrogen plant in the Pilbara region of Western Australia. Project Yuri which is being developed in partnership with Yara Clean Ammonia and ENGIE includes a 10 MW electrolysis plant and an 18 MW solar photovoltaic (PV) farm with its 8 MW Battery Energy System (BESS) providing the necessary energy for the electrolysis. It will produce up to 640 tonnes of green hydrogen per annum for use in the existing Yara Pilbara Ammonia Plant to produce green ammonia. Technip Energies is responsible for the overall project management and the electrolysis plant engineering, procurement, commissioning and start up. Monford Group is responsible for the overall project construction and the PV farm engineering, procurement, commissioning and start up.
Papua LNG Upstream Production Facilities (Papua New Guinea)
As leader of a consortium with Clough, awarded a FEED contract for TotalEnergies’ Papua LNG project’s upstream production facilities. The upstream production facilities cover the development of the Elk and Antelope onshore gas fields including the well pads and the central processing facility. It also incorporates a CCS scheme to remove the fields’ native CO2 and reinject it into the reservoirs.
Technology, Products & Services (TPS) – adjusted IFRS
(In € millions, except % and bps)
9M 2022
9M 2021
Change
Revenue
966.6
914.4
6%
Recurring EBIT
88.9
78.8
13%
Recurring EBIT margin %
9.2%
8.6%
60 bps
Financial information is presented under adjusted IFRS (see Appendix 8.0 for complete definition).
9M 2022 Adjusted revenue increased year-over-year by 6% to €966.6 million, driven by higher project management consultancy and engineering services activity in the Middle East, and improved activity in sustainable chemistry including renewable fuels, as well as Process Technology activity, including licensing and proprietary equipment, notably for PBAT, a biodegradable polymer, and ethylene.
9M 2022 Adjusted recurring EBIT increased year-over-year by 13% to €88.9 million. 9M 2022 Adjusted recurring EBIT margin increased year-over-year by 60 bps to 9.2%, benefiting from higher volumes in Process Technology licensing and proprietary equipment, notably in Sustainable Chemistry, and higher activity levels for project management consultancy and advisory services performed by Genesis. This growth was achieved despite higher selling and tendering activity in growth markets.
Q3 2022 Key operational milestones
(Please refer to Q1 2022 and H1 2022 press releases for first half milestones)
Neste Renewable Fuels Expansion (Singapore)
Project is completed in phases and several parts have been handed over to Neste while all the remaining construction activities will be completed before end of 2022.
Neste Renewable Products Refinery Expansion, Rotterdam (Netherlands)
Itemized procurement campaign substantially completed in line with the schedule. All civil and building subcontracting packages awarded.
Shell Skyline Ethylene Furnace Revamp EPF (Netherlands)
First modules shipped to the Netherlands. Second shipment to leave yard by end of October.
bp Greater Tortue Ahmeyim FPSO (offshore Senegal / Mauritania)
On the Hub/FLNG interface of the project, Loading Systems completes major installation; the largest ever manufactured loading arms are equipped with our ‘Easy Drive’ technology.
Q3 2022 Key commercial highlights
(Please refer to Q1 2022 and H1 2022 press releases for first half highlights)
INEOS’ ethylene Project One cracker (Belgium)
Awarded a large(1) contract for the proprietary equipment supply for INEOS Olefins Belgium NV’s 1,450 kiloton per annum ethane cracker in Antwerp, Belgium. This latest award is in line with our early engagement strategy and consolidates the successful completion of the Ethylene License and extended FEED previously awarded to Technip Energies by INEOS. The cracker is designed using Technip Energies’ latest enhancement on technologies to achieve a CO2 footprint less than 50% of the best 10% of European crackers. The furnaces are modularized and designed to fire high hydrogen fuel, and to transition to 100% hydrogen firing in the future, in addition to the plant being carbon capture ready. The plant design maximizes the use of modularization, using Technip Energies’ extensive experience in modularized LNG projects.
Neste Renewable Products Refinery Expansion in Rotterdam (Netherlands)
Awarded a significant(2) contract by Neste for the expansion of their renewable products production capacity, as part of the existing Partnership Agreement between Technip Energies and Neste. The contract covers Engineering, Procurement services and Construction management (EPsCm) for the expansion of Neste’s existing renewables refinery which will increase Neste’s overall renewable product capacity by 1.3 million tons per year. This contract follows the FEED delivered by Technip Energies in 2021.
Gray Whale 3 Floating Offshore Wind Project (South Korea)
Awarded a FEED in consortium with Subsea 7 and Samkang M&T by Corio Generation and TotalEnergies for their Ulsan Gray Whale 3 Offshore Windfarm project, located offshore the East Coast of South Korea. The FEED contract covers engineering for the floater, mooring, and inter-array cable (IAC) in collaboration with a wind turbine supplier. The design of the floating foundation will include Technip Energies’ in-house floater technology INO15™. With a capacity of 15 megawatts, INO15™ technology is a three columns semi-submersible floater which is well suited for large series production. Gray Whale 3, aiming to develop a 504 MW floating offshore wind farm located around 60 to 70 kilometers from Onsan Port in Ulsan, is one of three offshore wind projects with a total installed capacity of 1.5 gigawatts that Corio Generation and TotalEnergies are promoting off the coast of Ulsan.
License of first Blue H₂ by T.EN™ plant to LG Chem (South Korea)
Technip Energies announces that LG Chem selected our proprietary blue hydrogen technology to supply its Daesan complex in South Korea. The Blue H2 by T.EN™ hydrogen plant will capture a significant amount of carbon dioxide, and reduce carbon emissions from the petrochemical complex. LG Chem intends to utilize the captured CO2. The 56,000 Nm3/h capacity hydrogen plant will utilize Technip Energies’ proprietary steam reforming technology to convert methane-rich offgas from the naphtha cracking process into hydrogen. The hydrogen plant will include a selective catalytic reduction (SCR) unit for control of NOx emissions. The new hydrogen unit will be integrated with LG Chem’s naphtha cracking complex (NCC) to allow LG Chem to convert the petrochemical pyrolysis complex to a more sustainable low-carbon process.
Acquisition of Biosuccinium® technology for bio-sourced and fully biodegradable polymers production
This acquisition from DSM adds a technology solution to T.EN’s growing sustainable chemicals portfolio. This technology synergizes with recently developed proprietary bio-polymer technologies and provides a commercially referenced production of bio-based succinic acid (bio-SAc) that serves as feedstock for the production of polybutylene succinate (PBS). PBS itself is fully biodegradable and, if based on bio-SAc, is an ideal bio-based sustainable packaging material for food contact applications. It addresses consumers and governments concerns for better materials with lower carbon footprints and environmental impacts. Biosuccinium® technology will be the only technology for production of bio-based succinic acid to be licensed on the market.
Collaboration with deepC Store and Mitsui O.S.K. Lines for a floating carbon capture & storage hub development
Technip Energies, deepC Store Limited and Mitsui O.S.K. Lines executed a LOI regarding the EPC and operations for the CO2 floating storage and injection (“FSI”) hub facility scope for the CStore1 Project. CStore1 will be the first large-scale offshore multi-user hub and has a planned CO2 injection capacity of between 1.5 and 7.5 million tonnes per annum. It supports industry and community goals towards decarbonization and transitioning to a sustainable future. The three parties have agreed on the intent for Technip Energies to exclusively provide FEED and EPC services for the FSI hub using Technip Energies’ Offshore C-Hub™ technology, and for MOL to provide the Pre-FEED service for CO2 shipping scope and closely work with dCS and T.EN in relation to the FSI hub facility scope.
Advance technology collaboration with Agilyx with the launch of TruStyrenyx™ for chemical recycling of polystyrene
TruStyrenyx™ brand is the only all-in-one solution for the chemical recycling of polystyrene. TruStyrenyx™ combines Agilyx’s pyrolysis process and Technip Energies purification technology, yielding a recycled styrene monomer with exceptional high purity. Styrene monomer is used to make numerous plastics and other polymers. It is one of the three primary components of ABS (acrylonitrile-butadiene-styrene), can make the pure polymer polystyrene, and is an ingredient in various synthetic rubbers. This launch follows successful results from pilot plant testing conducted on difficult to recycle waste polystyrene, including flame retardant laden waste polystyrene.
Cooperation agreement with APChemi for advanced plastic Waste-to-Olefins technology
Cooperation agreement aims to commercialize APChemi’s advanced plastic waste to high quality pyrolysis oil technology, in conjunction with Technip Energies’ pyrolysis oil upgradation and steam cracking technology. APChemi’s patented “Pyromax™” pyrolysis technology for recycling plastic waste closes the gap in the plastic supply chain by taking dirty and mixed plastic waste, including municipal solid waste segregated plastics and multilayer packaging, and breaking it down to produce high quality pyrolysis oil which can be chemically recycled into circular plastics. The process has a lower carbon footprint, as it displaces the need for crude-oil-based feedstocks for plastics manufacturing, while reducing the need for intensive plastic waste sorting. Technip Energies is closing the circular loop from pyrolysis oil to polyolefins building blocks by bringing its ethylene furnace and steam cracker design expertise, along with the preparation and purification technologies. The Pure.rOil by T.EN™ purification technology ensures safe, reliable and optimized integration with crackers.
Corporate and other items
Corporate costs, excluding non-recurring items, were €32.2 million for the first nine months of 2022. This included a positive foreign exchange impact of €2.1 million. This compare with corporate costs of €26.0 million in the prior year period.
Non-recurring expense amounted to €2.8 million mainly related to impairment on leased offices and restructuring charges.
Net financial expense was €7.2 million, impacted by the mark-to-market valuation of investments in traded securities and, to a lesser extent, interest expenses associated with the senior unsecured notes, partially offset by interest income from cash on deposit which is progressively benefiting from higher rates of interest.
Effective tax rate on an adjusted IFRS basis was 29.9% for the first nine months 2022, in line with full company guidance for 2022.
Depreciation and amortization expense was €80.0 million, of which €53.0 million is related to IFRS 16.
Adjusted net cash at September 30, 2022 was €3.3 billion, which compares to Adjusted net cash at December 31, 2021 of €3.1 billion.
Adjusted free cash flow was €122.1 million for the first nine months of 2022. Free cash flow, excluding the working capital variance of €152.6 million, was €274.7 million benefiting from strong operational performance and consistently high conversion from adjusted recurring EBIT. Free cash flow is stated after capital expenditures, net, of €36.5 million. Adjusted operating cash flow was €158.6 million.
Liquidity and credit
Contacts
Investor Relations
Phillip Lindsay
Vice President, Investor Relations
Tel: +44 20 7585 5051
Email: Phillip Lindsay
Media Relations
Stella Fumey
Director Press Relations & Digital Communications
Tel: +33 1 85 67 40 95
Email: Stella Fumey
