THNPY (THNPY) Q3 2026 Earnings Report, Transcript and Summary

Good afternoon. This is the conference operator. Welcome, and thank you for joining the Technip Energies Third Quarter 2026 Results Conference Call. [Operator Instructions] At this time, I would like to turn the conference over to Marion Vayson, Director of Investor Relations. Please go ahead, madam.

Thank you, Maria. Hello, and welcome to Technip Energies' financial results for the first 9 months 2026. On the call today, our CEO, Arnaud Pieton, will discuss our 9 months performance and business highlights. This will be followed by CFO, Bruno Vibert, who will share more details on our financials. Arnaud will then return for the outlook and conclusion before opening for questions. And before we start, I would urge you to take note of the forward-looking statements on Slide 3. I will now pass the call over to Arnaud.

Thank you, Marion, and welcome, everyone, to our results presentation for the first 9 months of 2026. Let me begin with the key highlights. Our 9-month performance demonstrates the resilience of our execution model amid prolonged disruption to the operating environment in the Middle East. We delivered year-over-year revenue growth through disciplined execution and close coordination with our customers. As anticipated, profitability meaningfully recovered from the second quarter, and we achieved our highest ever quarterly EBITDA in Q3. We confirm our full year guidance. I want to draw your attention on a key feature of Technip Energies. Quarter-after-quarter, we have consistently generated strong free cash flow regardless of context. On the commercial front, building on an exceptional first half in project delivery, our order intake for the first 9 months reached an impressive EUR 14 billion. This has taken our backlog to EUR 24.5 billion, close to record levels. Together, these results show that we are managing the near-term environment effectively while reinforcing our long-term growth strategy. Let me now turn to the Middle East situation and how we have stabilized our operational and financial performance. Our teams moved quickly to adapt to this complex operating environment, establishing alternative logistical routes that have enabled us to operate safely and to keep our projects moving forward. The situation is currently stable with good operational progress translating into solid cash generation. The rate at which incremental costs are being incurred remains contained and in line with recent trends. They relate mainly to 2 areas: first, logistics, including alternative routes, standby fees and the storage of equipment at marshalling yards. Second, the resequencing of activities resulting from these constraints, together with the associated impact on operational efficiency. Logistics remains a key area of focus, particularly for critical equipment that cannot be transported over land due to weight and height restrictions. Looking ahead to 2027, access through the Strait of Hormuz for large equipment will become increasingly important for sustaining execution on a small number of projects. In parallel, our contracts provide strong protection and discussions to reach commercial resolutions are progressing. Overall, thanks to the tenacity and adaptability of our teams, operations are stable, financial impacts remain contained, and we continue to make good progress in a disrupted environment. While we continue to manage these near-term constraints, our order intake is reinforcing confidence in the medium-term outlook for Technip Energies. Year-to-date, order intake has exceeded EUR 14 billion. For context, this is nearly 75% higher than the average full year order intake since 2023. Project delivery orders, particularly in the first half were strong and diversified across end markets and geographies. Technologies, Products and Services, or TPS, is also benefiting from renewed demand, particularly in the traditional markets of ethylene, hydrogen and fertilizers. The book-to-bill ratio over the last 6 months for TPS has remained above 1, supporting the outlook for this segment. Overall, this performance validates our approach of pursuing selective growth in project delivery while enriching the TPS portfolio and increasing its contribution over time. Alongside our core priorities, we are advancing adjacent business models that leverage our differentiated capabilities and can enhance the durability of our earnings. Let me begin with Reju, the most mature of these ventures, which continues to advance. Its technology has been tested and proven with our Frankfurt demonstration plant producing high-quality recycled polyethylene or rPET, which has now been converted into commercial products by several brands. Substantial funding has also been secured through the Dutch government to support Reju's first plant at industrial scale. Agreements are secured for textile waste feedstock, while discussions are progressing for offtake agreements, supporting a potential final investment decision in 2027. Turning to sustainable aviation fuel. We are establishing Rebound, a joint venture to develop a major project in France. For this landmark alcohol-to-jet project, Technip Energies will act as lead developer and engineering services provider alongside Airbus, Safran and Tereos. This partnership model reflects a firm conviction that decarbonization can advance when producers and consumers invest together. We believe sustainable aviation fuel represents an attractive long-term market for where Technip Energies holds a leading position across all major pathways. So in conclusion, Reju and Rebound demonstrate how we can translate our differentiation into new sources of through-cycle earnings. With that, I will pass the call to Bruno to take you through our financial performance in more detail.

Thanks, Arnaud, and good afternoon, everyone. I will take you through the first 9 months of 2026 on an adjusted IFRS basis, focusing in particular on the strong sequential recovery in the third quarter. Overall, our performance normalized compared to the second quarter, supported by robust cash generation and exceptional commercial momentum. Revenues increased by 3% year-over-year to EUR 5.6 billion, driven by project delivery despite the continuing impact of the Middle East conflict. Recurring EBITDA was EUR 285 million. While the year-over-year comparison reflects the challenging operating conditions experienced in the Middle East, particularly in the second quarter, Q3 performance recovered strongly, delivering our highest ever quarterly EBITDA as a company. Third quarter EBITDA margin reached 8.9%, a significant recovery from 3.4% in the second quarter. Free cash flow conversion, excluding working capital and provisions remained high at 87%. Finally, the book-to-bill of 2.5 reflects the exceptional level of awards secured during the period. In summary, the third quarter recovery, strong cash generation and exceptional order intake provide a solid foundation as we enter the final part of the year. Turning to project delivery, where performance improved significantly from the first half. Revenues increased by 4% year-over-year to EUR 4.2 billion, supported by LNG and decarbonization activity in the United States and Europe. This growth was achieved despite continued disruption in the Middle East. Impressively, in the third quarter, project delivery revenues reached a new high, reflecting increased activity and the effective deployment of alternative logistics solutions. Third quarter profitability recovered substantially with the margin reaching 7% compared with 1.7% in the second quarter as operating performance normalized. For the 9 months, recurring EBITDA was EUR 219 million, representing a margin of 5.2%, consistent with the guidance provided at the half year. The year-over-year decline reflects incremental costs on some Middle East projects, primarily relating to logistics and productivity together with the assessment of certain disputed items recorded at the half year. We continue to pursue our contractual rights and expect to recover these costs with the amount and timing to be determined through ongoing commercial discussions. Segment backlog stood at EUR 23 billion, close to record levels and providing clear visibility over future activity. Overall, project delivery ended the fourth quarter with strong operational performance and a substantial backlog supporting its longer-term outlook. Turning to Technology, Products & Services, TPS, which delivered another robust margin performance. Revenues increased by 3% to around EUR 1.4 billion, supported by CO2 capture equipment, consultancy and engineering services work and the contribution from AM&C. This more than offset lower ethylene furnace activity. Recurring EBITDA increased by 8% year-over-year to EUR 216 million, with the margin expanding by 80 basis points to 15.6%. This performance reflected product delivery milestones, continued strength in consulting services and the contribution from AM&C. In Q3, the revenues of EUR 495 million was the highest since the fourth quarter of 2024, while also delivering a record quarterly recurring EBITDA margin of more than 16%, highlighting the quality of the portfolio and execution. Orders for the first 9 months totaled EUR 1.4 billion, up 22% compared to the first 9 months of 2025, supported by technology and equipment contracts in ethylene together with a broad range of studies, services and PMC call-offs. At period end, segment backlog was EUR 1.5 billion, in line with recent levels. With a broad opportunity set across ethylene, hydrogen and fertilizers, we anticipate a healthy evolution in order intake as we position TPS for future growth. Beyond the segment performance, let me cover the other key income statement and balance sheet items. Corporate costs were EUR 50 million, including the EUR 16 million noncash impact of ESOP 2026, our employee share ownership program recognized in the first half. The underlying trend remains favorable, and we now expect full year corporate costs to be towards the low end of the guidance. Net financial income increased sequentially in the third quarter, supported by higher average cash balances and the global interest rate environment. The effective tax rate was 31.6% within our full year guidance range of 30% to 32%. Turning to the balance sheet. Our financial position remains exceptionally strong. Gross cash increased to EUR 5 billion from EUR 3.8 billion at year-end and remain comfortably above our net contract liabilities of EUR 4.4 billion. Gross debt was stable quarter-over-quarter at EUR 1.4 billion. Together, these metrics demonstrate the strength of our balance sheet and the financial flexibility available to support our strategic and shareholder return priorities. Let's now focus on our cash flow performance for the first 9 months. Free cash flow conversion, excluding working capital and provisions remained robust at 87%, with free cash flow at EUR 336 million, more than 80% higher than at the half year. For the full year, we now expect conversion towards the upper end of our typical 70% to 85% range. The substantial working capital inflow primarily reflects the receipt of customer advances associated with major awards secured during the period. This demonstrates the cash efficient characteristic of project delivery and the financial benefit of the strong order intake. Financing activities were broadly consistent with the position reported at the half year, including debt and shareholder returns. We closed the period with almost EUR 5 billion cash and cash equivalents, our highest level to date. Before I hand back to Arnaud, I would like to briefly explain how IFRS 18 will change the presentation of our financial statements from 2027. The key point is that IFRS 18 will not change our net income or equity. It will change how the income statement is structured and how certain performance measures are presented. The new standard introduces clearer operating, investing and financing categories, together with the 2 required subtotals, operating profit and profit before financing and income taxes or PBFT. To illustrate the effect, had IFRS 18 been applied to our first 9 months of 2026, operating profit would have been broadly unchanged from the operating income currently reported. Recurring PBFT and PBFTDA, however, would both have been EUR 95 million higher, principally because interest income on our cash will move from financing to investing activities. These metrics are expected to qualify as management defined performance measures. We will apply the standard retrospectively from 2027 and restate the 2026 comparatives. In summary, IFRS 18 changes presentation, not performance, while more clearly highlighting the financial contribution of our strong cash position. I'll now turn the call back to Arnaud.

Thank you, Bruno. Let me conclude with our outlook and why we believe Technip Energies is well positioned for the years ahead. The developments in the Middle East reinforce the need for a more secure, diversified and resilient energy system. At the same time, the imperative to reduce emissions remains. These structural drivers support sustained investment across both traditional and low-carbon energy infrastructures, aligning directly to T.EN's capabilities and expanding our global opportunity set. Against this backdrop, we are seeing greater frontline engagement and a growing pipeline across LNG, offshore, energy derivatives and sustainable fuels. This can support order intake from 2027 through to the end of the decade, laying the foundations for stronger earnings into the 2030s. Technip Energies is operating from a position of strength with a near record backlog underpinning multiyear visibility and a substantial net cash position supporting capital allocation flexibility. Our priorities are to remain the reference for excellence in project delivery globally to deliver structural growth in TPS and to deploy capital selectively to enhance shareholder returns. So to wrap up, our robust Q3 recovery keeps us on track to meet full year guidance. Commercially, 2026 is outstanding with order intake driving backlog to record levels and strengthening the outlook for both business segments. Technip Energies is financially robust with the flexibility and strategic clarity to capitalize on the opportunities ahead. We are on track to deliver more than EUR 800 million of EBITDA by 2028, and we are confident in our ability to create lasting value for shareholders. We can now open the call for questions.

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

The first would be to focus on the cost side of things, I guess, particularly project delivery. That's what's driven a big beat versus expectations today rather than the top line. So could you just sort of clarify some of the moving parts there? I assume maybe some of your cost recovery conversations have progressed. So could you give us the sort of latest, I suppose, net cost run rate as it relates to additional costs in the Middle East? And I suppose the follow-on would be, is there any clear reason why you didn't revise the margin guidance higher for project delivery given how strong the 3Q result was?

Thank you, Matt. So cost recovery, partly for the costs related to the situation in the Middle East was obviously center stage in our half year earnings and discussion. And I would like to remind everyone of a few things. So first, our contracts provide very strong protection. And indeed, discussions to reach commercial resolutions have been and are progressing. So if I look into -- if I zoom in into the Middle East and the countries where we operate, in the UAE and in Oman, agreements are in place, I would say, for life of projects. So all uncertainty has been lifted on those 2 fronts. In Qatar, we are well protected. And I will say I speak to you today with greater confidence than even 3 months ago. We are moving from -- or we have moved from a position where we have contractual rights to our entitlement now being confirmed. And we're now moving to progressive submission of evidence for -- to enable the cost recovery. So all in all, a much greater confidence in the whole cost recovery aspect of the Middle East situation. Discussions really are progressing. We are in settlement mode everywhere. There is no dispute whatsoever on the relevance of claim with respect to war. So conversation really on the cost of war are kind of over, but they have moved in Qatar in particular. They've moved on and they moved on extended into all the claims and the VOs related to the normal course of the project execution. So naturally, this is -- this can take a bit more time, but this is really progressing. And because I suspect the cost recovery topic is one that is of interest to everyone. Matt, thank you again for the question. I think it's important to remind the audience that cost recovery really have 3 main elements. The logistics, and that's quite easy to price and to support. So clear cost of incremental logistics, standby alternative routes, storage, marshalling yards, et cetera. It's quite black and white. And if it is not settled everywhere, there's really no risk, and it's quite easy to demonstrate. And I would say this machine is now well oiled in terms of the cost recovery. Then second category is the loss of productivity. That's a direct impact on weekly progress that is measured on site, and it's part of the invoicing. So the client knows that the weekly deliverables and the gap can be measured. And this is a bit less black and white and less straightforward than the logistics cost, but it's real, and it takes a bit more time to support the -- to demonstrate the cost, but this is also in progress. And finally, extension of time costs, and that's costs associated to our project management team for being on projects for another 3, 4, 6 months. So that's too early to address. And some may see that as more of a gray area, but we are very confident overall. So our target really is to protect our bottom line and the project's bottom line and to bring the project's bottom line back to what they would have been -- what would have been the case pre-war. And I think great progress has been made. This is translating into the recovery of the performance for project delivery this quarter. And that's why I speak to you with greater confidence than even 3, 4 months ago.

Could I just -- yes, sorry to interrupt you. I'm getting onto it. Go ahead, sorry.

No, just maybe on the guidance, I think, for your second part of the question, last part of the question, year-to-date, we've delivered 5.2%. We had said at the end of Q2 that we were putting plus 5% as a floor. So we've been able to increment by 20 basis points, which is good. Now we thought that it was a bit premature to again change it to have a quarter which was more predictively borrowing was a good outcome.

The next question is from Richard Dawson, Berenberg.

I've got 2 on the guidance as well. Just firstly, on the revenue guidance. If I assume a similar level of revenue in Q4 as you delivered in Q3, you get to just below the lower end of both of the guided ranges for PD and TPS. So just trying to understand what's going to drive that acceleration in revenue across the fourth quarter. And particularly when you look at the top end of your guidance ranges for revenue, what maybe underpins the more sort of bullish expectations there? And then just following on from the question there on the PD margin. So Q3, you did 7%, which is almost a recovery back to what you were pre-war. Any reason that we couldn't have the same in Q4? Were there any one-offs that were maybe coming through at Q3?

Thank you, Richard. Bruno will take your questions.

So on the guidance, and I'll start maybe with TPS, where just shy of EUR 500 million. We've had, as I said, our highest quarterly TPS revenue since the Q4 of 2024. So we've had this step-up. Now also remember, if you go back to 2021 or from 2021 onwards, Q4 has always been the highest kind of contribution in terms of quarterly impact of TPS. So we see this ramp-up, we've had positive order intake momentum. So as I explained in the call of Q2, we see a positive trend that would, of course, put us in the guidance. Now it's shorter cycle. So it's always somewhat a bit more unpredictable, but the building blocks are certainly there. In terms of building blocks, I think it's even more the case for project delivery. We did adjust the top line of project delivery guidance in Q1, but that was very early on. And I was assuming the first assumption was that things would resume around summer. Of course, this hasn't been the case. Now we have been able to continue to progress, to make progress and our teams are working, finding the right way to keep progressing on the projects through alternative routes and so on. So here, the growth is a continuity from this project plus the ramp-up of the new or recently awarded projects, which are, of course, NFW, commonwealth, and all the projects which have brought backlog to close to EUR 25 billion. So these will continue to ramp up in the coming months, weeks and quarters, and that provides for a growth of product. Now as always, we're not obsessed by top line. We are more obsessed by bottom line and execution. But certainly, the backlog in hand gives us great confidence that we are able to continue to ramp up revenues even beyond the level which was obtained in Q3. In terms of bottom line, yes, we've had, of course, a recovery. Now we are more on a normalization. Again, the new projects are slightly dilutive. That's why you are seeing kind of not back totally to normal because the early-stage projects are diluting to the overall portfolio mix. And of course, they will be accretive in '28, '29 plus. So that gives us visibility. But so far, of course, providing that things remain the way they are, yes, we are around where we could expect things to be.

Richard, the form of normalization and stabilization, so how we'd like to see it.

The next question is from Guilherme Levy, Morgan Stanley.

Firstly, I'd like to ask on Qatar, if there has been any update on your role on the damaged trains. What's your latest stance on this project? Is it still on a consultancy basis only? Or would you be open to take EPC risk there? And then secondly, with your shares lagging peers year-to-date and the situation in the Middle East now looking a little bit more stable, would you consider being more active on the share buyback front, considering your very strong net cash position?

Thank you, Guilherme. So in Qatar, so the 3 projects we have, NFE, NFS and NFW. NFW is the youngest and it's early stage and the project is progressing normally. NFS, totally normally as well for now, and that's the one that we need to monitor in terms of the Strait of Hormuz passage and because that's the one that is more sensitive to large project delivery -- large equipment delivery. When NFE has everything on site for the 4 mega trains, and we are ready to hand over the first one and the second one is already starting commissioning somehow. So very -- I mean, actually very good progress in the country. When it comes to the repairs, we will -- we have been engaged in the early assessment. But I would say the contracting for the actual repair work is something that may come into next year. We will see it -- I think you rightly pointed at something important. It will depend on the contracting scheme. We are okay to take lump sum risks where we believe there's a chance of upside. We will not take lump sum risk if there's no chance of upside. And if it's largely a brownfield scope, we would favor a reimbursable scheme. That's the condition under which we would actually compete. That's -- we like to be cautious there. We like lump sum when there's upside potential. We don't like lump sum when there's no upside potential.

On the shareholder returns, indeed, yes, of course, we have a very healthy balance sheet, a strong net cash position that gives us a lot of flexibility for capital allocation. Capital allocation is returning cash to shareholders with significant step up this year, both the shareholder returns based on dividend plus the buyback program, which was executed and completed at the end in Q3. That's more than [ EUR 325 million ] that would have been returned to shareholders this year. As we will step into 2027, of course, then we have the ability to continue to return to shareholders to accelerate this return, but also to consider investments to deploy some capital. Is it for inorganic growth. Is it for adjacent business models. But we have certainly the capacity to do and to consider both to return cash to shareholders, but also create value on a long-term value and continue to increase the quality of earnings of the group.

The next question is from Sebastian Erskine, Rothschild & Co Redburn.

I'd like to just focus in on TPS. Obviously, a very strong performance on margins. Maybe you could explain some of the drivers of that 16% EBITDA margin. How is AM&C tracking versus your expectations and some of the other puts and takes around proprietary kind of product delivery milestones? And how sustainable is that margin into 2027, particularly with an eye to the 2028 margin framework?

I'll start and hand over to Bruno. I would start with maybe a bit of a focus -- I mean, a focus, but a general comment on AM&C. We're very happy with the acquisition. AM&C is delivering per their business plan, and that's the most important. It was -- I mean, it was one of the key priority for the AM&C team when they joined us. When setting the objectives for the team early 2026, my ask was, well, listen, we like very much the products and the solutions that you're bringing and how you're enriching the TPS portfolio. What is important in the short-term is that you and your priorities that you deliver to the business plan. They are delivering to the business plan, and that's the most important. At the same time, as you can imagine, through the integration, we are identifying how AM&C can actually contribute to what was Technip Energies TPS prior to the acquisition and vice versa. And this will yield opportunities in the years ahead. But we are quite excited about what might be coming our way for TPS and through AM&C going forward. So the enrichment of the portfolio will play in full in 12 to 18 months in terms of the co-creation of new solutions and the detection of new markets and new opportunities. As for the performance of TPS, I'll hand over to Bruno, but we -- it is clear that we -- our ambition is to continue to enrich TPS, first of all, in terms of the solutions organically or inorganically. And our, I would say, long-term or medium-term ambition is absolutely for TPS to be an equal contributor to the EBITDA of Technip Energies as the project delivery segment is. And this -- of course, we don't want this to happen through project delivery shrinking, but by TPS growing. And I think we -- all the building blocks are there for a stable and good performance. Bruno, if you want to shed a bit more color.

I think it has 2 main drivers. First, of course, from the execution and be it on consultancy, project management work, engineering services, very high level of activity, excellent performance, bringing good bottom line contribution from the techno and product scope, making good progress on equipment and packages, notably on carbon capture, but others, we've seen also a recovery of ethylene after a bit a long period, a long winter, if I could say. So the operating margin from direct contribution of both -- of all the subcomponents of TPS is providing. Second, it's an obsession on cost. And overall, we've been able to reduce cost -- indirect cost, SG&A year-on-year. We've been able to find good cost synergies. But with the integration of AM&C, we are really focusing on which tenders are the most likely and not following everything. So this is another element where we are able to bring some cost out by being laser focused on what's required to do the business and as optimized as possible. So I think both are contributing and are generating this nice, let's say, momentum on the bottom line of TPS.

And Sebastian, this is a tribute to the leadership of our TPS segment, which was very eager to demonstrate that after this first, I would say, meaningful acquisition by Technip Energies, we could deliver. And I very much can back Bruno up on the observation around cost and delivering even though this deal wasn't all about synergies, we've been able to identify and execute on areas for lowering cost and SG&A in particular. So it's very pleased with the performance. And I would say the focus of the team over turning this first acquisition into a success to demonstrate to you and to ourselves and our shareholders that we will know how to proceed and that we have a playbook that we are capable of executing.

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

So just a follow-up on Qatar, please. You mentioned the first train is ready for handover. What needs to happen to complete that process? And should we expect any associated margin uplift in PD? Maybe just one more on the Middle East costs. Guidance is assuming disruption through year-end. So if there is an extension into 2027, do you expect to require further provisions? Or any impact you could give on potential PD?

Thank you, Kate. So on Qatar, yes, great progress on NFE. NFE is well advanced with the first and actually the second train under commissioning. And I can only abide by or go by what our customer, QatarEnergy have recently confirmed a start-up in H1 2027. In order to have a start-up in H1 2027, we, as Technip Energies and our JV, we need to hand over 3, 4, 5 months ahead of that. And it's very much us handing over to QatarEnergy operations at this point. And after that, it's more in their hands than in our hands. But all I can say is just confirm exactly what has been communicated. There's good progress and this handover is happening at the moment. So there isn't much left to happen before a start-up. It's really -- the handover is happening now. In terms of 2027, I would say there is -- and I think in my address, I insisted on the fact that the situation in the Middle East and the Strait of Hormuz is mostly affecting one project, which is NFS in Qatar, which is still dependent, I mean, which is -- progress is still dependent on the ability to bring through the Strait of Hormuz, the series of equipment that cannot be transported by land or trucked from Oman, for example, because of the size in particular. So we've had some customer-led success on the crossing of the Strait to go to the UAE. We have ongoing discussions now with QatarEnergy. And it's obviously a major point of attention for NFS on what solution can we deploy in order to bring equipment so that the project can continue to progress with, I would say, a normal sequence. There's a lot of equipment that we've brought to NFS on land. So they have many work fronts into next year. But for sure, there are some critical equipments that in terms of sequence have to be delivered at a certain period of time in order to allow for the rest to continue. So we don't want to speculate too much on 2027. It's a bit early to provide color on the matter. But with the customers, usually, we found solutions. So we are in that mode at the moment. But so -- we're not planning for the worst in 2027. It's part of the scenario planning. Just it's a little bit premature. There are a lot of events coming in the days to come from the midterm to the rest. So let's see how the situation evolves. But so far, we managed to find solutions. So we are betting on the fact that it will continue to be the case. And if not, we know you can expect us to do some scenario planning with various assumptions. And it's mostly NFS that would be affected. I would say the rest of the portfolio in the Middle East is secured from an equipment delivery standpoint. So it's really -- that's why I said a small number of projects. It's actually quite isolated to a single one at the moment.

The next question is from Bertrand Hodee, Kepler Cheuvreux.

I have 2. I want to come back on the project delivery 7% EBITDA margin. In Q2, you said that you will keep a very prudent approach accounting-wise and that you would not assume that any of the EUR 30 million to EUR 40 million incremental logistical cost per quarter would be invoiced and recognized as revenues until a framework agreement is signed with some countries. So UAE has signed, as you mentioned, Oman, more recently, if I understand well, has also signed. So I guess you've been able to invoice a part of those incremental EUR 30 million to EUR 40 million cost in Q3. Because if not, then I would get to an underlying EBITDA margin of 9.2% at project delivery. So maybe you can explain to me the main moving part and your -- probably your net non-invoiceable logistical cost run rate in Q3. Sorry for the long question. And the second question is around outlook for order intake in '27, and especially with a focus on one region, UAE or one country, UAE because it looks to me that ADNOC is firing on all cylinders. Upstream oil expansion with another expansion Upper Zakum, upstream gas expansion with the Bab Gas Cap and associated gas processing plant as well as LNG in Jubail. So what are you -- what opportunities are you pursuing in 2027 in the UAE? And more broadly, what can you tell us or hint us on your order intake outlook for '27?

Thank you, Bertrand. Bruno will take the first one, and then I'll jump on your question number two.

Right. I get to bore everyone to death on the subtle details of the calculation. I won't go into too much details and granularity. But as Arnaud explained, we have been able to get this cycle and this movement on cost recovery and that has worked well, so that has enabled to do some [indiscernible] and you've seen this normalization, which was maybe indeed better than some expected. So that has moved absolutely in the right direction. Not everything, again, going back to the different kind of categories of sub costs, not everything can be discussed already. So some will actually go well into '27, '28 for some of the subcategories, notably for extension of time and what are the capacity to accelerate and recover that. These will be discussions that will happen when really operations can normalize after the end of those disruption. We, of course, have remained prudent, If we had all of a sudden taken estimates of cost or revenues that are not entitled, you would have seen a step-up in the contract asset where you have basically booked revenues ahead of your right to recognize these revenues before you can build. And actually, you've seen that or you may see that the contract asset has decreased -- has continued to decrease, which is where I would want them to have almost to their lowest level for the last couple of years. So we've kept quite a prudent approach. We are able to start to build and recover the cost that has helped, of course, to have this normalization. Now we are not totally, of course, out of this situation. So we do remain prudent.

Thank you, Bruno. And on your question about order intake and UAE in particular, so I'll start with UAE and zoom out a little bit to describe the commercial pipeline with UAE, but also broader worldwide [Audio Gap] at the moment. And we are interested absolutely to compete, and we will compete for Bab gas, so upstream and for East LNG in Fujairah. And we recently signed a pre-FEED and FEED service agreement for ADNOC Refining as well on how to debottleneck, I would say, enhance the capacity for crude processing at ADNOC's refinery at the Ruwais refinery. So it's -- we are absolutely interested in pursuing because they are of good quality. They are the right one with the customer and an environment we know. LNG, we like. Gas, same story. So expect to see Technip Energies to compete, including in some upstream part of the scopes for the UAE. But more broadly speaking, the opportunity set for 2027 and 2028. So if I look at the 18 months ahead of us, the pipeline is extremely rich. We always, as you know, us, we'd like to be careful on the timing of the FID and the award. Sometimes it's on the left side of the 31st of December, sometimes on the right side. So moving into 2028 in this case, that doesn't matter too much for us. But the pipeline is quite rich in the Middle East and beyond. And the Middle East remains important. But to future-proof Technip Energies, I also -- and we want the team to pay particular attention on securing work in regions outside of the Middle East. That's important. The molecule is here to stay, and it provides very long-term opportunity set for Technip Energies, and we see the investment happening really everywhere around the world and around the theme of molecule, mostly to provide strategic autonomy to some of the countries and also to create more diversification for energy to flow. I think someone before me stated that the energy landscape has been -- was until now super optimized kind of a just-in-time mode. Now investment probably is needed to create some redundancy and we will contribute to that. So the opportunity set for Technip Energies in terms of order intake at 2027, 2028 in the Middle East and beyond is quite important. But we will pay attention. We said the past 18 months, about 75% of our order intakes have been outside of the Middle East in order to rebalance a bit the backlog. I think it's important to continue to pay attention to this rebalancing. So strong interest for ADNOC. We love the opportunity set, but we're also looking beyond the Middle East.

The next question is from Henri Patricot, UBS.

Just 2 follow-ups on Bertrand's question. The first one around the project delivery EBITDA margin going into '27. I was wondering if you're able to give us a sense of the potential floor if we continue to see a similar situation in Middle East as the one we are seeing today. And based on the way discussions are going with customers, what would be the worst-case scenario for the margin next year? And then secondly, on the pipeline of opportunities that you mentioned, I wanted to ask about the competitive landscape. Are you seeing greater competition and potential pressure on margins? Or actually, there's so much to do that you'd expect to see pretty healthy margins going forward?

Sorry, maybe I can take the first part. And again, I think we will have ample time to go to the 2027 guidance. And maybe today, it's still a bit early. As we look to 2027, first, we're quite happy because we have a very nice backlog in hand already delivered and scheduled for execution in 2027, we have EUR 6.7 billion for project delivery. And of course, you will have the ramp-up of TPS. So that provides for a nice growth platform. This growth platform, of course, speaking of early contribution of projects will tend to be dilutive. That's by design in the way we approach and we deliver our projects. So this is why you don't maybe back too soon or too early in 2027 at this kind of usual 8% EBITDA target that we have that we also called at the end of Q2. So you have a nice normalization. You have a significant ramp-up of revenue, which is providing a bit of a dilutive effect within the mix. So overall, from an absolute value, you will continue to have a meaningful growth of EBITDA project delivery now in terms of percentage, what's the mix and what is the scenario of recovery and what is the extension and how can we accelerate? I think that's still a bit early to really be able to be assertive on that.

And on your second question about the competitive landscape. Well, it is, I would say, the usual one for LNG projects with nonetheless, I would say, a caveat. There are potential new entrants for floating. We see the Chinese from Wison being interested to compete in floating LNG, for example. And we see equipment providers moving into putting together a proposition that is more integrated, expanding their scope beyond pure equipment delivery, and therefore, looking to team up with companies capable of providing a full performance wrap on their infrastructure. So it's a somewhat evolving landscape, but it's not expanding too much either. And there's such an amount of activity worldwide that when I look at the opportunities we are tracking, in fact is in the Middle East or beyond the Middle East, on the starting line, you will find usually 2 competing JVs or consortiums or maybe up to 3, but very rarely beyond that. So yes, there's competition, and we need to be at the top of our game and remain on our toes because at the end of the day, time to market and price wins and nothing else. But that's what we -- that's why we're here. So I think that's the situation today.

The next question is from Jamie Franklin, Jefferies.

Just a follow-up on the backlog point into 2027, EUR 7.4 billion looking quite strong. Firstly, do you see any prospects in the remaining months of this year, which could add to that 2027 backlog position? And then secondly, clearly, Qatar projects and more specifically NFS make up a sizable part of that. Are you able to quantify how much just to get a sense of confidence on ability to deliver that EUR 6.7 billion PD backlog in '27 if the situation in Middle East remains as it is today? And then second topic, can you give us your view on potential prospects in U.S. LNG? Obviously, we saw plans announced last month for the expansion of Commonwealth LNG, which you would clearly look well positioned on as and when it comes to FID in the coming years. Are there any other prospects that you are currently looking at, please?

Okay. Thank you, Jamie. So in terms of the backlog and the remainder of the year, I think the 2026, we declared it this way earlier this year was to be front-end loaded in terms of awards. It's proving to be the case. So we will have in Q4, of course, some orders coming. But I don't expect a major multibillion project contract being awarded to Technip Energies before year-end. This is now -- I would say we've already -- we're kind of -- we're concentrated and we're concentrating on the 2027 season when it comes to project deliveries. So the awards in Q4 will be mostly TPS awards and there's always a PD content, but maybe not in billions. In all likelihood now this is moving into the 2027 season. When it comes to NFS, of course, it will be a key contributor in 2027. We know exactly how much it is supposed to contribute. But we're not going to provide more granularity at this moment. There is -- like I said, a lot of the progress on NFS is currently permitted because we are able to deliver equipment to the site. And into next year, before the first half, it would be nice that we can actually go and cross the Strait of Hormuz and deliver the large equipments, which cannot be shipped or trucked by land. So that's the main condition to NFS firing on all cylinders versus not. So it's too early. I'm actually describing 2027 already through NFS would be speculation. So I prefer that we continue our plan. Every time we had an up cycle, if I may say, we've been able to lift it alone or more often than not with the help of the client and that's what we are concentrating on. And importantly, almost regardless of the -- and I will not give a guidance on top line for 2027 project delivery. But what I can say to characterize 2027 project delivery, it's that almost regardless of NFS being able to progress fully or being affected, if I put -- assuming that the situation remains as it is today, you can expect some top line growth in project delivery regardless of NFS running full steam or being limited in how much they can progress. On U.S. LNG prospects, yes, we're very active, of course, as you know, on Commonwealth, and I was personally on site a few weeks ago. It's progressing really well with the land preparation and everything. It's a very active site. So I was very pleased with the progress that I've been able to witness there. And there's a good collaboration between us and our clients. So really strong. Being the incumbent, we intend to, of course, complete for any expansion or extension that may come to the project. We have -- we are engaged on more LNG in the U.S. on 2 prospects, which I will keep for myself now in -- what can I say in terms of LNG in the U.S., Commonwealth was our segue into LNG in U.S. We're there. If we succeed, I think more doors will open. It's difficult actually to be part of expansions on existing assets because they like to go with replication. And since Commonwealth is our first project there, we are, of course, not part of the Golden Pass and other -- Cameron and other developments. So -- but there are more than that to come. So we -- what is important is to become the incumbent. And it's a case on Commonwealth, and we have 2 more opportunities to become the incumbent.

The last question is from Jean-Luc Romain, CIC CIB.

It relates to TPS. The first 9 months EBITDA margin is 15.6% as it was more than 16% in the third quarter. Do you expect the sales mix over the fourth quarter to be less favorable, which would explain your around 15% guidance?

No. Thank you, Jean-Luc. As I said, I think we've tried to be very lazy and not to change the guidance in Q3 after changing it twice this year. So it's too early. We see -- it's shorter cycle, so you can have some differences. The trend, the momentum, whether it's for services, whether it's for techno licensing, whether it's for product and equipment delivery, it's execution, it's focusing on cost and to continue to drive basically this differentiation and margin upwards. So I think we are quite successful in driving the TPS margin, which was sub-10% to some extent a few years ago when we created T.EN. We think that we brought it up. That's all credit to the teams, to the investment we've made. And of course, the focus of the team is to continue to drive margins up. Now can we have a slightly lower margin in Q4 versus Q3? Yes, that can happen. But the direction of travel is set, and we are absolutely looking to maintain these kind of levels over the future periods.

Ms. Vayson, I'll turn the call back to you for any closing remarks.

Yes. Thank you, Arnaud. Thank you, Bruno, and thank you, everybody. That concludes today's call. And please do not hesitate to 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.