Earnings call transcript: GTT sees revenue surge in Q1 2025

Gaztransport et Technigaz SA (GTT) reported a significant increase in its Q1 2025 revenues, reflecting a robust performance in its core LNG carrier technologies and expanding digital solutions. The company’s stock saw a modest rise of 0.74% following the earnings announcement. According to InvestingPro analysis, GTT appears undervalued at current levels, trading at an attractive P/E ratio of 4.5x while maintaining a GREAT financial health score.

Key Takeaways

• Total revenues increased by 32% year-over-year to €191 million.
• New builds revenue grew by 36%, highlighting strong demand.
• Digital activities revenue surged by 88%, driven by new contracts.
• Stock price rose by 0.74% post-earnings, reflecting positive investor sentiment.

Company Performance

GTT delivered a strong performance in Q1 2025, with total revenues climbing to €191 million, a 32% increase compared to the same quarter last year. This growth was primarily driven by a 36% rise in new builds revenue, underscoring the company’s strong position in the LNG carrier market. The digital activities segment also showed impressive growth, with revenue increasing by 88% due to new contracts, including a TMS contract for 130 vessels. The company’s overall revenue growth trend remains solid, with InvestingPro data showing a 6.56% increase in the last twelve months and an impressive 5-year revenue CAGR of 6%.

Financial Highlights

• Revenue: €191 million, up 32% year-over-year.
• New builds revenue: €181 million, up 36%.
• Electrolyzers revenue: €1.1 million, down 63%.
• Digital activities revenue: €4.7 million, up 88%.
• Services revenue: €42 million, down 31%.

Outlook & Guidance

GTT confirmed its full-year 2025 targets, projecting consolidated revenues between €750 million and €800 million and EBITDA of €490 million to €540 million. The company plans to maintain a dividend payout of at least 80% of net income, building on its impressive track record of maintaining dividend payments for 12 consecutive years with a current yield of 3.14%. GTT is also exploring mergers and acquisitions in the digital sector to further expand its offerings. Want deeper insights? InvestingPro subscribers have access to over 10 additional exclusive ProTips and comprehensive financial metrics for GTT, including detailed valuation analysis and growth projections.

Executive Commentary

Philippe Bercourotier, an executive at GTT, noted the "dynamism of this market for this year," highlighting the company’s optimistic outlook for continued growth. Thierry, a financial executive, emphasized the need for future acquisitions to bolster the company’s digital capabilities. Bercourotier also pointed out the potential profitability of convincing a large number of ships to adopt GTT’s solutions.

Risks and Challenges

• Market saturation in the LNG carrier sector could limit future growth.
• Supply chain disruptions may impact production schedules.
• Regulatory changes, such as IMO regulations on LNG as fuel, could affect operations.
• Economic uncertainties and currency fluctuations pose potential risks.
• Competition in the digital solutions market may intensify.

GTT’s Q1 2025 results demonstrate the company’s strong foothold in the LNG carrier market and its strategic focus on expanding its digital solutions. As the company continues to explore growth opportunities, particularly in the digital sector, it remains well-positioned to capitalize on market dynamics and maintain its competitive edge.

Full transcript - Gaztransport et Technigaz SA (GTT) Q1 2025:

Philippe Bercourotier, Executive/Senior Management, GTT: 5,000,000 to two ten million tons per annum. That should trigger new liquefaction projects. This bodes well for future ship orders, including replacements for aging vessels. Several projects could be sanctioned in twenty five-twenty six after relatively cryo 2024 in terms of FID. Since February, no additional projects have been sanctioned, but several are progressing well and have moved in the most likely FID category.

For instance, the Rio Grande 20 4 for next decade, having now around 80% contracted following Total Energy’s recent announcements. The CPE2 Phase I project for Venture Global has launched its FID process. While regulatory developments in The U. S. Are encouraging, ongoing geopolitical uncertainty and the tariff disputes may impact the timing of these decisions.

I now over to Thierry for a closer look at our Q1 revenue.

Thierry, Financial Executive, GTT: Thank you, Philippe. Good evening, everyone. Let’s look into more details at revenue by activity at the end of Q1 twenty twenty five. Total revenues at €191,000,000 are up 32% compared to Q1 twenty twenty four and driven by new builds standing at €181,000,000 plus 36% and benefiting from a higher number of LNG carriers under construction in Q1 twenty twenty five. Driven by electrolyzers revenues through our Elogen Affiliate, which are down at minus 63% and stands at €1,100,000 as Elogen continues its transition and repositioning and following 2024 with very few orders.

Regarding digital activities through our ASCENT Smart car affiliate, which increased its revenues by 88% at €4,700,000 reflecting strong momentum and benefiting also from the integration of VPS. Finally, revenues from services decreased by 31% in at €42,000,000 due to a lower level of pre engineering studies in Q1 twenty twenty five compared to Q1 twenty twenty four, which are non recurring by

Philippe Bercourotier, Executive/Senior Management, GTT: nature.

Thierry, Financial Executive, GTT: All in all, this is a solid start to the year for GTT. And now, and the floor back to Philippe for the outlook.

Philippe Bercourotier, Executive/Senior Management, GTT: Thank you, Thierry. Looking ahead to 2025, we confirm our targets with consolidated revenues expected to range between EUR $750,000,000 to EUR 800,000,000. EBITDA should be between EUR $490,000,000 and EUR $540,000,000. Lastly, we maintain our dividend policy with a payout of at least 80% of consolidated net income. That concludes today’s presentation.

We are now available to answer your questions.

Conference Moderator: Can we start the Q and A session, please?

Q&A Moderator: The first question is from Kevin Roder from Kepler Cheuvreux. Please go ahead.

Kevin Roder, Analyst, Kepler Cheuvreux: Yes, thanks. Good evening. Thanks for taking the time. I have two questions, if I may. The first one is maybe on the digital stuff.

With the top line declining and the explanation saying that there is a drop off in pre project studies, can you explain us a bit, is it a leading factor or leading indicator for future orders? Or it’s completely different? And when you say pre project studies, it has nothing to do with potential orders or whatever. Just to be sure what it means, the drop off in pre project studies, if it’s a kind of leading indicator for future orders? And the second one related to the A10 carrier.

The dynamic has been quite impressive year to date and well above in a sense what is implied by your midterm market view for the next ten years. So if you can comment a bit here the market dynamics and maybe if there is any cautiousness or whatever in your midterm targets, please?

Thierry, Financial Executive, GTT: Thank you, Kevin. I will take the first one, Philippe. Regarding services, We have always mentioned that pre engineering studies non recurring by nature. So that’s why it’s difficult to have a forecast on it. Last year, we obtained a significant funding studies from The U.

S. Mainly. And due to the context that now, it was more difficult to capture more services for our businesses. So that’s why we cannot deliver any guideline or guidance for this services business. But we are working on it to maintain a good momentum because we have in this area, maintenances, training activities as well.

And we expect to develop this part of the activity, even if the pre engineering studies are non recurring by nature.

Philippe Bercourotier, Executive/Senior Management, GTT: So on the second point on the ethane dynamics, it’s a market which is quite different from the LNG business. It’s really for the chemical industry, and it’s mainly between The U. S. Ethane is coming with methane in The U. S.

And it’s largely exported to Asia, China, India also very soon to Thailand. In our opinion, there is going to be a limit to that. It’s why we are a bit cautious in our long term expectations in terms of needs of ships for transporting ethylene to other places in the world. So we maintain that. We are seeing the dynamism of this market for this year, for the beginning of this year and last year.

But we gave some ten year forecast two months ago. We are not going to revise that even though we are very satisfied by all these orders. Okay, understood. Thanks. The

Q&A Moderator: next question is from Jean Francois Drangon from ODDO. Please go ahead.

Jean Francois Drangon, Analyst, ODDO: Yes, good evening. Two questions from my side. The first one concerned the recent decisions from the IMO, the International Maritime Organization, regarding the LNG as a fuel. This is some positive news in fact. So could you comment that and the overall impact for your business, for GTT business, for LNG as a fuel?

And the second question concerns the relations between U. S. And China and the risk to see some taxes or port fees for each vessels built in China. So what you can comment with that? And do you see some risk for GTT?

Thank you.

Philippe Bercourotier, Executive/Senior Management, GTT: Okay. Well, on the first question, I would say that, first of all, it has what you call the decision from IMO is not yet a definitive decision. It has to be voted in next October. So let’s say it passed a very important milestone at the IMO level, but it’s not yet a definitive decision. But while we consider that it’s going to be a positive for LNG, LNG as a fuel in particular.

But what is good for LNG as a fuel is good for LNG in general. And particularly, because it needs you need ships for transporting you need LNG carriers for transporting this energy to places where it’s going to be delivered to LNG fueled ships. So we can assess that the impact is positive. More generally, regulations which are leading ships to generate less CO2 are very good in general and also very good because they are in accordance with our strategy, which is to develop technologies helping ships to reduce their emissions. On your second question, relations between U.

S. And China, I think that something which is ongoing. There are trade between energy trade between The U. S. And China.

But finally, they are not so important. When you look at the LNG imported by China, I think that 5% is coming from The U. S. So it’s quite limited. But still, I was talking about ethane, ethane exported from The U.

S. To China. Well, that is not particularly positive. I do hope that in the next weeks, these two countries will come to terms on the way of exchanging goods between them. We can see that China is needing energy, is needing feedstock, but they are also needing agricultural products that The U.

S. Can export. And we see that The U. S. Are needing plenty of things manufactured in China.

So I do hope that and that finally the consequences would be limited in 2025.

Jean Francois Drangon, Analyst, ODDO: Okay. Thank you, Philippe.

Q&A Moderator: The next question is from Daniel Thompson from BNP Paribas, Exane. Please go ahead.

Daniel Thompson, Analyst, BNP Paribas, Exane: Hi, good evening. Thanks for taking my questions. So firstly, I was wondering on the digital business, you announced what looked to be quite a significant order with TMS for the entire fleet. Could you help us in terms of how we should think about the revenue opportunity of that order maybe to relative to the existing subscriptions on vessels you have at the moment? I mean, there a very large range in the subscription price per vessel?

Anything you can sort of point us towards there? And then on the M and A front in digital, I was wondering where are you seeing valuations and bid offer spreads in the sub segment? I know M and A is a part of your strategy to grow this business. Thank you.

Thierry, Financial Executive, GTT: Regarding these digital activities and the contract that we obtained from CMS, it’s a good thing for us for two main reasons. The first reason is because it’s massive 130 vessels. And the second element, it constitutes 100% of recurring revenues. It means that in the future, we will we have secured this working for the future. That’s a good news for us and for our digital activities for the future.

Regarding the second part of your question, M and A opportunities, definitely if we discuss about digital, we expect to develop this activity with two ways. The first way is definitely organic revenue, organic increase based on the VPS acquisition that we performed last year and based on our solution, robust solution for the digital activities. And the second element is M and A. Definitely, if we would like to have a key position, key leader position in the future and to speed up the process of increasing revenues and to be very profitable, we need to perform an acquisition in the future. We are working on it.

Daniel Thompson, Analyst, BNP Paribas, Exane: Okay. Thank you. And just following up on that, would you be looking at sort of a single target or does the sort of ambition you have require you to, I don’t know, just pursue multiple smaller acquisitions?

Thierry, Financial Executive, GTT: Both. You know that the market is very, very fragmented. And if it makes sense for us to have a small acquisition because we like to acquire experiences or robust solution for our client, definitely we will do it even if it’s a small company. But if we can have a medium sized company, definitely we will move in that way because it means that we can have more revenues and additional EBITDA for our business. But both solution is fine for us.

Philippe Bercourotier, Executive/Senior Management, GTT: Thank you.

Thierry, Financial Executive, GTT: It was the case with VPS, it was a small acquisition and it’s very profitable company today. Yeah.

Q&A Moderator: The next question is from Richard D’Authuis from Berenberg. Please go ahead.

Richard D’Authuis, Analyst, Berenberg: Hi, good evening and thank you for taking my question. My first question is on order outlook. So maybe if you could just talk a bit about the order outlook from here for LNG carriers this year. I appreciate we might see some delays to the sanctioning of The U. S.

Project, but it was also suggested at FY twenty twenty four results that there’s between 50 to 75 vessels that still need to be ordered for those LNG projects that are already under construction. So are we seeing any slowdown to those potential orders just given the uncertainty we’re seeing sort of more broadly? And then secondly, are there any updates to the search for a permanent CEO? Thank you.

Philippe Bercourotier, Executive/Senior Management, GTT: Well, Richar, we did not understand perfectly your question, but I think I guess what your question is. The we still assess that there is a need for tens of ships, even though in the first quarter of this year, there were some orders, including six very large ships and no FIDs yet. But there are still a need of, let’s say, between forty and sixty five maybe ships for the projects under construction. Some of these projects are delayed and that’s why there are ships which have been delivered on time, which are quite idle for the time being and giving the feeling to some people that the market is a little bit long. And we expect that those who are meeting ships for these projects, these delayed projects and according to what we know, these projects are going to be ready sometimes in 2028, at the beginning of 2029.

They are going to look at ships quite soon. It’s also the return we are discussing with the projects, these LNG projects and the ship owners who are discussing about these ships with us and with the shipyards. So we have distilling, of course, there is a kind of factor due in this market due to the delays, but that is taken into account by the ship owners. Did I answer to your question, Richard?

Richard D’Authuis, Analyst, Berenberg: Yes. Thank you very much. And then just a second question on the search for CA.

Q&A Moderator: The last question is from Jean Luc Roman from CIC Market Solutions. Please go ahead.

Conference Moderator: Good evening. To extend on James’ question about the contract with with TMS, how can we approach those kind of enhancements in order to try to make an estimate of the turnover it could generate over the years?

Richard D’Authuis, Analyst, Berenberg: Well,

Philippe Bercourotier, Executive/Senior Management, GTT: there are many ways of answering to your question, Jean Luc. First of all, we can say that finally designing a tank or developing smart shipping solution is a bit the same. We are developing efficiency solutions, very efficient solutions. And the development of our digital activities is helping very much our core business. We can say also that we discovered that beyond our core business, where we developed several smart shipping solution.

We applied these all that potential to normal ocean being vessels. Here, it’s very much a matter of upsize. We have 100, so we passed the 1,000 landmark, we are close to the 202,000 landmark milestone. And it’s very much a matter of number of ships. Once you really convince a very large number of ships, it can be something very, very profitable.

So we are working on that to we don’t see improving our solution to be even more convincing, are very much encouraged by the TMS decision, which have tried our solutions and they’ve been convinced and they come after several other owners. Of course, we would like to go faster. But in this industry, you’ve got to take time to convince ship owners about the adequacy of our auto solutions. So we work on that. We know that we provide very good solutions, excellent solutions.

And we are going to continue to convince customers and to improve our and to enlarge our portfolio of solutions.

Conference Moderator: Thank you.

Q&A Moderator: Mr. Bercourotier, I will turn it back to you for closing remarks.

Philippe Bercourotier, Executive/Senior Management, GTT: For closing remarks,

Daniel Thompson, Analyst, BNP Paribas, Exane: I think we have

Conference Moderator: a you written question coming from the web?

Philippe Bercourotier, Executive/Senior Management, GTT: The last one? Last one? Yes, this one. Okay. The CO process, the CO structure is ongoing.

It has been launched. We so as soon as we have information on that, we are going to inform you. But we are actively and the Board is actively working on that. And I do expect to be in a situation to tell you more in a not too distant future. I would like to thank you very much for the time you’ve spent with us And I hope to talk to you very soon.

Thank you. Thank you.

Q&A Moderator: Ladies and gentlemen, thank you for joining the conference. Now over, you may disconnect your telephones.

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