Really glad to have with me Baker Hughes, Chairman, President, and CEO, Lorenzo Simonelli. Lorenzo, you've been the CEO since 2017, basically since the company came together, Legacy Baker Hughes, Legacy G Oil & Gas. So really glad to have Lorenzo with us. Now, Baker Hughes is a household name in oil and gas. Everybody knows Baker Hughes, but I'm sure there are people in attendance who do not know Baker Hughes that well. So we'll start with some foundational questions. We'll dive deeper into the details. uh but lorenzo let's let's just kick start it okay good to be here sir yep thank you uh and uh lorenzo i did want to start with the with the business and the basics but i do see uh emma sitting in the front row so uh this is topic 11 on the road the past week or 10 days a lot of questions come up on this topic on the cfo transition topic right so maybe let's kick start there what's the what's the thought process what's the board thinking uh why now Definitely.
And first of all, you can see that Ahmed is here. And I want to give my appreciation and also gratitude to Nancy Beese, who did a splendid job during the last few years. And as we look at the plan from a Baker Hughes perspective, back in 2022, we laid out really three stages of the journey. And Horizon 1 was going to be associated with some of the financial controls, financial systems, simplification, also the processes from an external perspective, giving guidance. And as we continue into Horizon 2 and Horizon 3, it's a lot more about the profitable growth and the synergies between the two segments, the way in which we continue with new energy and also some of the R&D that we've been investing in over the past few years. Ahmed has a history with Baker Hughes as well as with the industrial energy technology business. He's been working with Ganesh, who leads our industrial energy technology business for the last two years, and really helped turn that business into more growth, profitable growth, and leading the way towards the 20% EBITDA for 2026. So as we thought about the progression of Baker Hughes and also the Capital Markets Day that we're preparing for September 4th, where we'll lay out the journey for the next three years and also horizon free, this is a good timely moment to make a transition and to have Ahmed come in and really start to own that horizon two and horizon three.
Right, right, right. No, that makes sense. Even from a timing standpoint, it makes sense. And then maybe just a little bit more color, right? I mean, it has been at Baker for a long time, right? So maybe just talk to the skills that he brings to the table and obviously the experience, the domain knowledge that he has accumulated over the years, right? How does that contribute?
I'd say he definitely has the financial acumen, and from his background, he's going to maintain what Nancy has already put into place and continue the simplification of finance, also the aspect of controls and bringing down our tax rate, which has all been initiated. Also, what he provides is the business affinity, and having spent several years at the headquarters with financial planning and analysis, having spent time in oil field services, understanding their business during the integration, and most recently with the industrial energy technology being the CFO there, brings an appreciation for how LNG continues to grow, how our gas infrastructure and our new energy, and also how we bring the oil field services, products and services into solutions for our customers. So I think, again, from a background, a depth of the company, and also the connections within the company, a very well-established personality.
Right, right, right. Now I'm sure we'll get to talk with and work with Ahmed a lot more going forward, all of us on the buy side, sell side, regardless, right? All the investment community would get to know him also. Ahmed, good luck for the job. And maybe let's pivot a little bit, Lorenzo. Like I said, you're a household name in the oil and gas world, right? but a lot of people who are not close to the story, how would you describe Baker Hughes to those guys who are new to the story? Why are you different? How are you different from your peers? And then we all talk about IET, which is the differentiated part of your business, right? Why is it more industrial versus oil field services?
So when you look at the household name of Baker Hughes, you will associate it with a rich history of over 100 years being in the oil field services. I'd say, first of all, what differentiates us is even in the oil field services and equipment, we're much more on the production side. We've actually exited a number of the commodity areas, the variation of, as you look at seismic or you look at exploration. So we're in the less cyclical and more stable aspects of production, chemicals, ESPs. And when you look at Baker Hughes today, following the merger in 2017 of G-Oil and Gas, we really are an energy and industrial technology company. And so we provide the services that are needed from an extraction and production perspective, but we complement it with the gas turbines, the compression, the valves, the pumps that are needed to actually move the molecules as well. And so when you look at it holistically, we have a better appreciation of the value chain when you think of energy and industrial, and we all know how important the molecules are to energy that's required and increasing in demand over the next decades. And we're very strong on natural gas and also have a solid position in liquefied natural gas. So when you look at Baker Hughes today, it's very different than what we had historically, and it's much more of an energy and industrial technology company. Right, right, right.
I want to dive deeper into that, Lorenzo, right? And especially you mentioned natural gas. Obviously, that's a big piece of what you're doing in IIT. You provide all the mission critical equipment with compression, liquefaction, right? But ultimately, it's tied to natural gas, right? So maybe spend a few minutes talking about the outlook for natural gas.
Very positive outlook. I think we've said for some time that natural gas is not a transition fuel. It's a destination fuel. And the reason why we've been saying that is because it is a reliable, affordable, secure, and sustainable molecule that we know can actually provide a lot of benefits as we go forward with the increasing demand for energy. And when we think about natural gas and the properties it has, this is the time of natural gas. When you think about the energy mix and you look historically, it takes time to move one to the other. And the The energy transition is really about an energy expansion. And while you see the demand increasing, our addressable market associated with natural gas is over $140 billion. And that is going to be a significant growth leverage for Baker Hughes as we go forward. And we're more gas-oriented. And as we go forward, you'll see that within the LNG upcycle. You'll see that within the gas infrastructure. You see it from an onshore, offshore production. You're seeing it now from a data center perspective. And really what you have is the reliability of natural gas coming to the prominence. And that's going to be a key element of the energy mix of all nations going forward.
Right, right, right. So definitely there are lots of layers, lots of different end markets you serve. LNG is one that people know well, and you obviously dominate that market. Let's start with LNG, right? Obviously, in the U.S., the current administration is supportive of LNG. Just talk about what that means from your perspective, FID, orders, and then maybe a little bit of time on the non-U.S., the international side of the LNG pipeline.
If you go back to what we said at the beginning, we clearly saw that LNG was going to play a key role during the course of this decade. In 2019, we said that by the end of the decade, we needed 800 million tons per annum of installed capacity, and we're well on track with that. As you look at roughly 500 million tons in production today, you've got another 200 million tons that's in actually construction, and another 100 million tons is going to be FID between 2024 and the end of 2026 to be there for 2030. And in fact, last year, you know, there was about 17 million tons that was FID'd. Given the pause in the United States that took place, that was less than what was expected. However, we're now seeing those projects come back, and we fully expect the rest to be FID'd during the course of the next years. Also, what we're seeing is a continued pipeline of projects that go beyond 2030. And when you look at the offtake agreements that are being structured, last year, a very high offtake agreement. These are 20-year offtakes. They are cementing the role that natural gas and, in particular, LNG will play in the future beyond 2030. So we've got a pipeline of projects that say this cycle isn't over in 2030. and we'll be having more FIDs as we go into 28, 29 that will take the installed capacity beyond the 800 million tons as we go from 2030 to 2035. And you can see it in the policy of countries as well. China continuing to increase its mix of energy associated with natural gas. Other countries in Southeast Asia already saying they're going to utilize more LNG. And so feel very confident in that. And U.S. is a big contributor. And you can see that this administration has already lifted the pause on day one. Also is talking about energy dominance. And one of the aspects there is by utilizing the natural gas resources the United States has as a way to export energy through liquefied natural gas and help with the trade imbalances that take place with other countries.
Outside of the US, you also have a lot of strength in LNG.
If you look at the ongoing expansion in Qatar, you look at the prospects that are taking place in Africa with Mozambique and also future potential for Tanzania. You look at South America, you've got the opportunity of Argentina. And again, as you look at Southeast Asia, some LNG and floating LNGs that are taking place. So we see that globally where you're resource rich, you're going to have a lot of LNG opportunities. Right, right, right.
Now, clearly you're by and far the leader in LNG, right? You pick a liquefaction plant in the world. More likely than not, it's going to be Baker Hughes equipment in there, right? How did you get to that position and how have you been able to stay in that position for so long?
We like critical equipment and mission critical equipment. And so when we pick the areas where we play, it's where we can have a long-term view of taking the difficult stuff and getting specified and actually becoming in some way a partner with our customers in making them successful on the production. So when you look at LNG, it's an aspect of the reliability, the continued focus on investment. We have a portfolio of LNG capabilities that goes from stick build to modular, that goes to floating, goes to onshore, goes mid-scale, small-scale, large-scale, and that provides a lot of versatility. And also, liquefying natural gas is not something that's easy. Likewise, when you look at the other sectors we play, gas infrastructure, compression, pipeline, being able to have the substations and compression.
Our compressors are some of the best in the world, and also the marrying that we do with the gas turbines is some of the most sophisticated engineering so as to enable our customers to have efficiency and profitability at the end of the day right right no liquefaction is one thing right but like you said it's really natural gas right and no matter what you do you have to compress or liquefy gas right so the compression side of things midstream gas infrastructure fpsos there are a lot of other end markets outside of liquefaction where you play And again, the order book is getting more and more diversified, right? So maybe just spend a little bit of time on the non-LNG part of your IT.
Yes, and I think for those of you that looked at the company last year, it was a great example of the versatility and the diversity we have within our portfolio. At the beginning of the year, I can remember getting phone calls when the LNG pause was announced by the prior administration, with a lot of people questioning our outlook for orders, given that LNG is a component and they felt a large component. We successfully achieved over $13 billion in orders. We maintained our guidance throughout the year. And it's really because of the versatility and diversity from onshore offshore production, the gas infrastructure, A good example being in the Kingdom of Saudi Arabia, the Master Gas System 3, Algeria, Haza-Rimmel. And these are infrastructure developments that are going to continue. As you think of natural gas being increased as an energy mix, you're going to need to invest in the infrastructure as well to obtain the molecule, be able to process the molecule, and be able to transport the molecule. And FPSOs, as you look at seven to nine a year, we see that being constant going forward. And now, most recently, we've got also the opportunity with power generation and data centers. So we see a lot of tailwinds across more than just LNG, but the diversity of our portfolio. Right, right.
No, exactly.
I want to touch on the data center topic a little bit because you wish you two press releases, I think, in the last 10 days or maybe two weeks, something like that, right? maybe talk to that opportunity right how broad is that opportunity how clear is it and what's the potential for making use it's getting clearer and clearer I think everybody knows that there is a big push from a generative AI perspective the huge incremental CPU usage and the requirement for data centers and as you look at the United States in particular where we were at an energy surplus now the view is we'll have an energy shortage and a lot of that is driven by the incremental consumption from data centers. What we're able to provide is that off-grid power supply and that is from our Nova LT turbines. They are distributed power generation and it is a quick way to be able to set up a data center when time is of the essence. And we have shown ourselves as gaining contracts with TurbineX, which we announced last week, which again is supplying those type of gas turbines to data centers. And then we've also, if you look at Frontier Carbon Solutions, provided turbines as well as CCS solutions. And Frontier is looking to have not just the data center powered, but then also be able to capture the CO2 and re-inject the CO2 and store the CO2. That brings into play the oil field services side of the house, the knowledge we have on the subsurface, the knowledge we have on well construction, knowledge we have around the whole storage capability. And so these are examples of what we're seeing, not just in North America, but then also globally, as you're looking to speed to market for the data centers that need to go in today and be powered today, where there is no grid available, and there is no utility scale that can be matched at the same time. As we go forward, we also have the new technology, which is NetPower, a separate company, but we We provide the turbo expander, and that's 300 megawatts of clean power solutions, no emissions. And we think that, as we go forward, will be an opportunity for us as well with data centers once we go to market in 2028, 2029, with the actual units available.
Right, right. And Lorenzo, you mentioned speed to market is critical in data centers, right? How quickly can you actually supply these NOVA-LD turbines?
If you look at current lead times, you're looking at 12 to 18 months if you were to audit it, and we have to obviously manufacture it and provide it. We also have inventory on hand, and so some of those lead times are reduced in the way in which we package accordingly. So we work with our customers to make sure that we match up what their needs are and work collaboratively on that. And so far, we've seen the benefits of being able to do that with the orders that we've announced and a strong pipeline going forward. Right, right, right.
I think so far, Lorenzo, we've spent a lot of time on equipment side of things, right? I do want to make sure that we spend time on the services side of things within your gas tech services business. It's a very differentiated, very long tail business, right? High margin. Maybe speak to that opportunity a little bit, right? Especially given how much your installed base is set to go up. It is.
And it's sometimes the underappreciated part because we talk a lot about the equipment going in. The beauty about this equipment going in is that it's razor, razor blade. And when you look at critical equipment, it consumes parts. It is there for a long time. And as the OEM, we have contractual service agreements, we have MRO agreements, we provide materials, we provide services on an ongoing basis. And so we have over $15 billion of services in backlog in our industrial energy technology business. And as you see the installed base continue to go up, an example being LNG equipment, a 70% increase in our installed base. We have a high attachment rate to services and contractual service agreements, which will go for 25 years. And obviously, that's similar to other scenarios is at a margin rate that's very attractive and also the longevity of the service contracts. Right, right, right.
And then the one other aspect of the IIT business is climate technology solutions, right? New energy part of the business, which has been accelerating, honestly. You've been doing better than the prior year with every passing year, right? I think you did, what, $1.3 billion in orders last year. You plan to get to $6 to $7 billion by 2030. Talk to that. What's driving the growth in that business and what happens between now and 2030? Does the mix change?
Yeah, we set ourselves up for, you know, being a participant in what is both energy expansion and also a desire to lower emissions. And we think that desire is still there. And also the project pipeline is very active. And we call it our new energy. And we laid out a target of six to seven billion by 2030. We started out a few years ago with only 250 million. We closed out last year with just over 1.3 billion. And it's broken down into carbon capture, utilization, storage. You've also got hydrogen. You have geothermal. You have clean integrated power solutions. And you have emission abatement and measurement. And when you think about deflaring opportunities, large projects where gas is being flared or methane is being flared, And we can sequester that and reuse it and actually bring value to it. So we see a continued progression globally on the opportunities here. The addressable market, again, we see a $60 to $70 billion across this. And today, the pipeline, about 30% to 40% is CCUS. Then the other relevant parts make up the rest. And as we go forward, we feel very confident that the mix will continue to evolve and also there's potential for further increases as we go forward. But there is no stopping the aspect of also value of CO2 and bringing lower emissions into focus.
Right, right. So clearly, Lorenzo, lots of growth opportunity, very diverse set of growth opportunity for you. if we just pivot to the margin side of things a little bit, right? You were at 15% margin, I think, in 2023. This year's guide is 18%. Your target is 20% for 2026. What is driving that margin expansion?
We laid out very clear targets for margin attainment in 2022. And we said for our oil field services and equipment business, 20% EBITDA in 2025. We're right on track there. And for our industrial energy technology business, 20% by 2026. And as you see, the progression, it's really built off a couple of things. First of all, the backlog and the pricing and backlog as we convert the backlog is at a better pricing level than it's been historically. Also, the volume and productivity as we go through the manufacturing, as we go through the actual output of the project, it's coming through with the productivity, and a lot of credit to the team and Ganesh for the Kaizans and all the work that's been done in streamlining and providing that productivity. Then you've got the industrial businesses that are returning back to their historical margin rates. We had some supply chain challenges with chip constraints. Most of those are through. And so now we're getting back the volume. And the gross margin was always good, but now we're seeing the EBITDA rate come up as well. And as we go forward, you've got R&D, which we've stepped up, but as we're increasing volume, the liquidation of that and its impact comes down. So we've got clear line of sight to 20% EBITDA in 2026. And that's only a point in time. We also have a destination that's higher than that. And that's why we're going to be giving a further update on September 4th, because we want to show the journey of progression as we go through horizon two right right the productivity front lorenzo i think you spoke on the call last quarter that uh with the same roofline you are able to produce 40 percent more equipment uh in your florence facility right so that's a big number and speaks to what the nation team has been correct been doing correct and there's a huge focus on that continuing and we really have been able to variabilize a lot of what people in the past are viewed as, you know, a fixed cost structure. Right, right, right.
Let's pivot a little bit to the OFAC business, Lorenzo, that's obviously more cyclical, tied to your conventional drilling and completion spending cycle, but you are more lever to production than a lot of your competitors, right? So maybe speak to that business a little bit. How are you different on the production front, and what's your strategy in that business?
On the oil field services and equipment, And we've had a very good presence within chemicals as well as electrical submersible pumps. And when you look at the weighting, we exited fracking in the U.S. We exited a number of the commodity areas. And our focus is really on international and mature asset solutions. And when I talk about mature asset solutions, this is about doing more with what you have today from the existing wells. And if you think of global production, about 70% of global production comes from mature assets. A well that's been around for 25 years or 50% has been recovered of its resource. We can, through our technology, through the combination of the chemicals, the ESPs, the digital array of software that we provide, increase that production. An example is in a field, we were able to increase production by 40%, 15,000 barrels a day by providing these capabilities. And we see that as being a CapEx lightweight to make sure that we continue to increase production as is needed from the demand. And we are less focused on the high capex of the exploration, and we focus much more on the mature assets and the solutions, and also the contribution of synergies with our industrial energy technology. If you think about having these assets in the field, you need to provide power generation to electrify them. You need to provide compression. And so we're able to provide a capability and synergy between our two business areas to be able to effectively get more out of these mature assets. And we think that's going to be a key focus going forward as people want to be, you know, more CapEx disciplined and actually focus on the OPEX. Right, right.
And again, it's big. Production is bigger within your portfolio, but you're also the market leader, right? ESPs, I think you're the biggest ESP company. Production Chemicals, you are one of the two market leaders, clear market leaders out there, right?
We have over 50,000 ESPs installed. We are present globally with new chemicals facilities in Singapore and the Kingdom of Saudi Arabia. So we made these decisions a few years ago to be ready for what we think is going to be a big continued focus on unconventional and also mature onshore wells. And it's also relevant to gas. And you're seeing a lot more gas production as well from mature assets. Right, right, right.
I want to spend some time on the synergies between the two businesses, right? But before we do that, Lorenzo, maybe let's spend a little time on the margin outlook for the OFSC business. 20% target, your guidance is there. Yeah, right.
What's next? It's only a point in time. And as you look at the progression, again, there's still room to go. I think when you look at what the team's achieved over the course of the last few years with Maria Claudia and now also with Amarino, a lot of credit in self-help. And we have been really, since the integration, rationalizing, simplifying, exiting certain commodity areas, making improvements in the way in which we have field personnel and the connectivity between our regions, our product segments within oilfield services and equipment. and you look at the off-field equipment business now being at industry margin rates and great progression there from the tree perspective and the flexible side. So where do we go from here? We reached the 20% this year, and then we continue to move forward. There's still a gap to some of our peers that we think we can close through self-help and also through the focus that we have our mature asset solutions and we'll be depicting that on the next capital markets day but I want to be clear that we've always said we had to get to a point in the journey of the 20% and then we continue moving forward right now definitely looking forward to that capital markets day I think all of us and then like I said Lorenzo people do and you did your strategic analysis in the past right do these businesses belong together IET or FSC or do they not, right?
Obviously, you came out with the conclusion that they do, right? So maybe speak to that a little bit. Why did you reach that conclusion? What are the synergies in the two businesses?
When you look at the two areas and you look at the two segments, first of all, there's very much a homogeneous customer base. And when you look at the revenues across the two and you look at the customers, you know, 70% is consistent between the two segments. And as you look at the way in which the industry is evolving, and you look at also how some of the international and national oil companies are changing, they're moving into the areas of hydrogen. They're moving into developing LNG. They're moving into geothermal. And when you think about all of this, it brings into focus the combination between subsurface knowledge and top-side equipment and being able to drive the synergy associated with that. And scale matters with these customers. I'll give you a good example of a recent announcement in Guyana with Exxon Guyana. We have the top side equipment on the FPFO, as well as then the chemicals that actually provide a better outcome when you combine the two together. And we were able to show that. As you think about a kingdom of Saudi Arabia and Aramco, as they think about their gas. And you look at Geofora and you look at the gas infrastructure that's required, as well as then on the pipeline and master gas system too, and the subsurface knowledge. Algeria, with again, the similarity of being able to combine capabilities. So on the data centers, I gave you the example of what was just announced relative to data center turbines with CCS being combined. We've also got the Valley Resources, which again is an opportunity where you see the combination of the two segments coming together. So I think you're going to see these come more to the forefront and we see it as a key differentiator for Baker Hughes going forward. Right, right.
One other thing that comes up, Lorenzo, is on the digital side of things in your business, right? You talked about Lucipa a fair amount on your calls, right? Maybe talk about the importance of digital Lucipa, maybe specifically, and what are you doing in that domain?
We see digital as one of the key themes that is going to enable productivity, efficiency, and reduce downtime. In the oil field services, we call it Lucipa. And it's really from an aspect of being able to pinpoint also with Corva and other software the most best location for actually retrieving the resource, maintaining the uptime of the ESP and providing that guidance to the operator in an informed fashion and being able to anticipate what's next. As you look at Cordon, which is on the industrial energy technology side. Again, similar aspects of asset monitoring, detection of anomalies, and preventative actions being taken. And what we're working on is really providing that visibility now across the wing-to-wing by also incorporating LUCIPA, incorporating CORDANT around CCUS with our carbon edge. And these are things that for the operator provide insight and then also give them insight on the balance of plants. So further productivity and efficiency to bring down extraction at a lower cost or production into the effective molecule at a lower cost.
Right, right. And again, Lorenzo, like I said, at the beginning, I've been meeting with a lot of investors the past 10 days. And to wrap up OFSC, I do want to talk about the recent OPEC Plus decision to start unwinding their cuts effective April. Talk a little bit about that. How is that going to impact your OFSC business?
I'd say at the moment, and again, our overall guidance for the year has not changed. We have seen a, I think, choppy start to the year. And in particular, when you think of oil field services relative to the OPEC Plus announcement and its impact on some of the pricing out there, as you look at Mexico and some of the activities, reductions that are taking place there. So as we look at the first quarter, some choppiness there, also tariffs and some of the day-to-day announcements that we're seeing obviously create some pause in some decisions being made. So we're working through all of those. Again, no change to the overall year guidance, but I think you've got some choppy turmoil just because of these external factors in the first quarter as people understand exactly what's happening. And we think that they will resolve themselves as we go forward.
Yeah, yeah, yeah. I do want to pivot to the cash flow side of things, Lorenzo. But before that, a couple of the questions that I've been getting a lot lately. One is on tariffs. So maybe you can touch on that. What's the impact on Bitcoin use? What are you seeing right now?
So we've got a very diversified supply chain. And again, we've modeled various scenarios. Also, the direct materials that we buy that are impacted from tariffs are very small. we've got buying and selling that takes place from different locations we've also got a large international content of where our shipments go so at this stage we don't see a material impact from tariffs clearly we're monitoring the situation working with our customers also the contracts we have in place the commercial agreements different ways in which titles change all comes into a factor. The good thing is we've got flexibility in our supply chain, and we've been through this before. Tariffs are not new to us, and we've seen them in prior administrations, and we're navigating and working with our customers and partners and making sure that we manage the impact. At this stage, we don't see an impact.
Right. Because it's a fast-moving situation, right? We'll see how things evolve. May change. We adapt your strategy to that, right? And the one other thing that I hear a lot from people these days is the Russia-Ukraine situation, right? How does that impact, right, if we reach a resolution on that conflict? How does that impact Baker Hughes, especially on the LNG side of things for you?
Well, I hope we come to a resolution and peace is a good outcome for all relative to impact on Baker Hughes. We exited Russia in 2022, so clearly we'll have to assess what the situation is of any peace agreement and also what the rule of law is, what sanctions are in place, and also from a Baker Hughes perspective, if we wish to evaluate any reentry or not. at this stage. We're monitoring the situation. I will say that from an impact of Russia reopening up, we don't see a negative impact. Again, the flows of Russian resources have been going elsewhere, and they'll continue to be going into different locations. Not that much came off the market. And so we think that the energy demand is strong.
And again, it's an all of the above is necessary and from an outlook of baker hughes um if um russia is open there's net upside uh and it's something that we would have to evaluate right right right lorenz i know we are running out of time i'm looking at the clock right here so let's focus on free cash flow a little bit uh clearly you you go high 40 percent uh even out of free cash flow conversion this past year guidance is 45 to 50 but we know your target is to get to above 50 free cash flow conversion right So what steps are you taking to get there, about 50%, right? And when should we expect you to get there?
Yes, and what we've said is, you know, through the period, you can see us, you know, from a conversion perspective at about 50%. And when you look at the work in progress, it's really improving the way in which the billing cycles, the collections. And Ahmed, in fact, has been running our free cash flow initiative for over a year. and we feel very good about the processes being improved. We think there's still a lot that can be unleashed on the oil field services and equipment side as well as we go forward. And so that comes from process improvements and be able to sustain that 50% free cash flow on a free period cycle. Right, right.
And you're returning 60 to 80%, right? So at least 60% of that cash to shareholders, right? That we should still expect that strategy?
Yes, our policy hasn't changed When we look at returning to shareholders, 60 to 80 percent, that's through dividends, which we've maintained and increased even through the pandemic, maintaining them. And then through buybacks, which are opportunistic at a time. And we have, you know, a very solid balance sheet. We want to have a good balance sheet that's strong, which provides us flexibility and continue to return 60 to 80 percent to shareholders. mm-hmm okay then we are running out of time Lorenzo maybe we can take one question from the audience if somebody has it otherwise we just wrap it up over you hi hi Lorenzo thanks for taking the time any views you can share on upcoming M&A or spaces you'd like to spend more time in as we've said before you know we've been performing a portfolio review consistently we've made some technology investments. If you look at Brush on the industrial energy technology side for the electric motors, you look at also Quest Integrity on the inspection side and what we did with Altus on the oilfield services side complementing the completions portfolio we have. So we're always going to be looking at ways in which we can upgrade our portfolio and continue to invest in new technology and that will be a continuing exercise.
Fantastic Lorenzo, I think let's stop over here, we're out of time but thanks a lot for the time and thanks a lot for the discussion.
Thank you very much.