Release Date: July 26, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Gaztransport et technigaz SA (GZPZY, Financial) reported a 66% increase in revenue for the first half of 2024, reaching EUR295 million.
- The company's EBITDA rose by 70% to EUR177 million, with a strong EBITDA margin of 60%.
- The order book is at an all-time high with 58 new orders, providing high visibility until 2028 and beyond.
- Gaztransport et technigaz SA (GZPZY) received major approvals for its GTT NEXT1 technology, enhancing its competitive edge.
- The construction of the Elogen Gigafactory has begun, with expectations to start production in Q4 2025, indicating future growth potential.
Negative Points
- The anticipated takeoff of the hydrogen market has not yet occurred, leading to delays in final investment decisions for Elogen.
- The company faces competition from Chinese shipyards promoting type B tanks, challenging its LNG as fuel market position.
- High construction activity in Korean and Chinese shipyards poses a risk to meeting delivery schedules.
- Elogen reported an EBITDA loss of EUR13.6 million, reflecting challenges in the nascent hydrogen market.
- The supply chain is under tension due to high demand, which could impact future operations and deliveries.
Q & A Highlights
Q: What caused the increase in core revenue expectations from the order book for 2024? Is it due to an acceleration of vessel construction or new orders?
A: The increase is related to the new orders won in the first half. The construction schedules at the shipyards are proceeding as planned, despite the high activity levels at both Korean and Chinese shipyards. (Jean-Baptiste Choimet, CEO)
Q: Can you explain the EUR21 million positive impact from the release of provision that affected net income?
A: The EUR21 million is from a settlement received in March 2024 for unauthorized use of GTT's intellectual property. This receivable was fully depreciated in 2023 due to uncertainties, but was recognized in 2024 upon receipt. (Thierry Hochoa, CFO)
Q: How is the competitive landscape for LNG as a fuel, particularly against Chinese shipyards' type B tanks?
A: GTT's membrane technology is superior due to better boil-off performance, lighter weight, and less steel usage, which results in lower CO2 emissions. Additionally, GTT provides support throughout the ship's life, offering a competitive edge. (Jean-Baptiste Choimet, CEO)
Q: What are the main risks that could affect reaching the high end of the revenue guidance range for the full year?
A: The main risks include the high construction activity at shipyards and the nascent market for diversification activities, which could impact order intake. These factors necessitate a cautious approach. (Jean-Baptiste Choimet, CEO)
Q: Can you clarify the order intake and order book for Elogen, given the reported figures?
A: No significant new orders were reported for Elogen in the first half due to the slow development of the hydrogen market. However, there is optimism for future orders as the market potential is significant. (Jean-Baptiste Choimet, CEO)
Q: How does the pricing model work for new technologies like NEXT1, and will it affect pricing per ship?
A: The royalty paid by shipyards is based on the containment system's square meter, and this remains unchanged with NEXT1. However, starting a new series of vessels may reset the pricing to the full royalty rate. (Jean-Baptiste Choimet, CEO)
Q: What are the priorities for capital allocation given the expected cash buildup?
A: Priorities include maintaining the 80% dividend payout, funding organic growth and R&D, and pursuing targeted M&A for growth and synergy potential. Share buybacks are not currently on the table. (Jean-Baptiste Choimet, CEO)
Q: What is the expected CapEx level going forward, and what does the current CapEx cover?
A: Current CapEx includes headquarters rehabilitation, VPS acquisition, and strategic venture investments. Future CapEx will continue to support these areas, but a specific run rate is not provided due to ongoing opportunities. (Thierry Hochoa, CFO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
