Bank of America, based in New York. 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 GE Oil & Gas. 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. We'll start with some foundational questions. We'll dive deeper into the details. Lorenzo, let's just kickstart it.
Okay. Good to be here, Sven.
Yep. Thank you. Lorenzo, I did want to start with the business and the basics, but I do see Ahmed sitting in the front row. This is topical. I've been on the road the past week or 10 days. A lot of questions come up on this topic, on the CFO transition topic, right? Maybe let's kickstart there. What's the thought process? What's the board thinking? Why now?
Definitely. First of all, you can see that Ahmed is here, and I want to give my appreciation and also gratitude to Nancy Buese, who did a splendid job during the last few years. As we look at the plan from a Baker Hughes perspective, back in 2022, we laid out really three stages of the journey. Horizon One was going to be associated with some of the financial controls, financial systems, simplification, also the processes from an external perspective, giving guidance. As we continue into Horizon Two and Horizon Three, it is 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 have 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 few years, and really helped turn that business into more growth, profitable growth, and leading the way towards the 20% EBITDA for 2026. 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 Three, 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. Maybe just a little bit more color, right? Ahmed has been at Baker Hughes for a long time, right? 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 oilfield 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 oilfield services, products, and services into solutions for our customers. I think, again, from a background, a depth of the company, and also the connections within the company, very well-established personality.
Right, right, right. No, 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. Maybe let's pivot a little bit, Lorenzo. Like I said, you're a household name in oil and gas world, right? 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? We all talk about IET, which is the differentiated part of your business, right? Why is it more industrial versus oilfield services?
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 oilfield services. I'd say, first of all, what differentiates us is even in the Oilfield Services & 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. We're in the less cyclical and more stable aspects of production, chemicals, ESPs. When you look at Baker Hughes today, following the merger in 2017 of GE Oil & Gas, we really are an energy and industrial technology company.
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. 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. We are very strong on natural gas and also have a solid position in liquefied natural gas. 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? Especially you mentioned natural gas. Obviously, that's a big piece of what you're doing in IET. You provide all the mission-critical equipment with compression, liquefaction, right? Ultimately, it's tied to natural gas, right? 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. 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. 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. The energy transition is really about an energy expansion. While you see the demand increasing, our addressable market associated with natural gas is over $140 billion. That is going to be a significant growth leverage for Baker Hughes as we go forward. We're more gas-oriented.
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. Really, what you have is the reliability of natural gas coming to the prominence. That's going to be a key element of the energy mix of all nations going forward.
Right, right, right. Now, 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, others, 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. 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. In fact, last year, there was about 17 million tons that was FIDed. 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 during the course of the next years. Also, what we're seeing is a continued pipeline of projects that go beyond 2030. 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. 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 2028, 2029 that will take the installed capacity beyond the 800 million tons as we go from 2030 to 2035. 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. I feel very confident in that. The U.S. is a big contributor. You can see that this administration has already lifted the pause on day one. It is also talking about energy dominance. 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 U.S., 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.
As you look at Southeast Asia, some LNG and floating LNGs that are taking place. 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. 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. 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. That provides a lot of versatility. 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.
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? Like you said, it's really natural gas, right? No matter what you do, you have to compress all liquefied gas, right? The compression side of things, midstream gas infrastructure, FPSOs, there are a lot of other end markets outside of liquefaction where you play. Again, the order book is getting more and more diversified, right? Maybe just spend a little bit of time on the non-LNG part of your IET business.
Yes. 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. It is 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 III, Algeria, Hassi R'Mel. 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. FPSOs, as you look at seven to nine a year, we see that being constant going forward. Most recently, we've got also the opportunity with power generation and data centers. 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 issued 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 Baker Hughes?
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. 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. 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. We have shown ourselves as gaining contracts with TURBINE-X, which we announced last week, which again is supplying those types of gas turbines to data centers.
We have also, if you look at Frontier Carbon Solutions, provided turbines as well as CCS solutions. 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 oilfield 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. These are examples of what we're seeing, not just in North America, but 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 NET Power, a separate company, but we provide the turbo expander, and that's 300 megawatts of clean power solutions, no emissions. 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. Lorenzo, you mentioned speed to market is critical in data centers, right? How quickly can you actually supply these Nova LT turbines?
If you look at current lead times, you're looking at 12-18 months if you were to order it, and we have to obviously manufacture it and provide it. We also have inventory on hand, and some of those lead times are reduced in the way in which we package accordingly. We work with our customers to make sure that we match up what their needs are and work collaboratively on that. 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 have 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 Technology 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 install 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. When you look at critical equipment, it consumes parts. It is there for a long time. As the OEM, we have contractual service agreements. We have MRO agreements. We provide materials. We provide services on an ongoing basis. We have over $15 billion of services in backlog in our Industrial & Energy Technology business. 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.
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. The one other aspect of the IET 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 $6-7 billion by 2023. 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 being a participant in what is both energy expansion and also a desire to lower emissions. We think that desire is still there. Also, the project pipeline is very active. We call it our New Energy. We laid out a target of $6 billion-$7 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. It is broken down into carbon capture, utilization, storage. You have also got hydrogen. You have geothermal. You have clean integrated power solutions. You have emission abatement and measurement. When you think about deflaring opportunities, large projects where gas is being flared or methane is being flared, we can sequester that and reuse it and actually bring value to it.
We see a continued progression globally on the opportunities here. The addressable market, again, we see a $60 billion-$70 billion across this. Today, the pipeline, about 30%-40% is CCUS. The other relevant parts make up the rest. As we go forward, you know we feel very confident that the mix will continue to evolve. Also, there is potential for further increases as we go forward. There is no stopping the aspect of also value of CO2 and bringing lower emissions into focus.
Right, right. 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. We said for our oilfield services and equipment business, 20% EBITDA in 2025. We're right on track there. For our Industrial & Energy Technology business, 20% by 2026. 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 projects, it's coming through with the productivity. A lot of credit to the team and Ganesh for the Kaizens and all the work that's been done in streamlining and providing that productivity. You have 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. Now we're getting back the volume. The gross margin was always good, but now we're seeing the EBITDA rate come up as well. 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. We've got clear line of sight to 20% EBITDA in 2026. That's only a point in time. We also have a destination that's higher than that. 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 with the same roofline, you are able to produce 40% more equipment in your Florence facility, right? That is a big number and speaks to what the Ganesh and team have been doing.
Correct. Correct. There is a huge focus on that continuing. We really have been able to variabilize a lot of what people in the past have viewed as a fixed cost structure.
Right, right, right. Let's pivot a little bit to the OFSE business, Lorenzo. That's obviously more cyclical tied to your conventional drilling and completion spending cycle, but you are more levered to production than a lot of your competitors, right? 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 oilfield services and equipment, we've had a very good presence within chemicals as well as electrical submersible pumps. When you look at the weighting, we exited fracking in the U.S. We exited a number of the commodity areas. Our focus is really on international and mature asset solutions. When I talk about mature asset solutions, this is about doing more with what you have today from the existing wells. If you think of global production, about 70% of global production comes from mature assets. Wells that have 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. We see that as being a CapEx lightweight to make sure that we continue to increase production as is needed from the demand. 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. We are able to provide a capability and synergy between our two business areas to be able to effectively get more out of these mature assets.
We think that's going to be a key focus going forward as people want to be more CapEx disciplined and actually focus on the OpEx.
Right, right. 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. 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. It is also relevant to gas. You are 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? Before we do that, Lorenzo, maybe let's spend a little time on the margin outlook for the OFSE business. 20% target, your guidance is there.
Yep.
Right? What's next?
It's only a point in time. 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 Amerino, a lot of credit in self-help. 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. You look at the oilfield equipment business now being at industry margin rates and great progression there from the tree perspective and the flexible side. Where do we go from here? We reached the 20% this year, and 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 on mature asset solutions. We'll be depicting that on the next Capital Markets Day. 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. No, definitely looking forward to that Capital Markets Day, I think all of us. Like I said, Lorenzo, people do, and you did your strategic analysis in the past, right? Do these businesses belong together, IET, OFSE, or do they not, right? Obviously, you came out with the conclusion that they do.
Yes.
Right? 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. When you look at the revenues across the two and you look at the customers, 70% is consistent between the two segments. 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. When you think about all of this, it brings into focus the combination between subsurface knowledge and topside equipment and being able to drive the synergy associated with that. Scale matters with these customers. I'll give you a good example of a recent announcement in Guyana with ExxonMobil.
We have the topside equipment on the FPSO, as well as then the chemicals that actually provide a better outcome when you combine the two together. 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 Jafurah 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. 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 value resources, which again is an opportunity where you see the combination of the two segments coming together. I think you're going to see these come more to the forefront.
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 Leucipa a fair amount on your calls, right? Maybe talk about the importance of digital Leucipa, maybe specifically, and what are you doing in that domain?
Yeah, we see digital as one of the key themes that is going to enable productivity, efficiency, and reduce downtime. In the oilfield services, we call it Leucipa. And it's really from an aspect of being able to pinpoint also with Cordant 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 Cordant, which is on the Industrial & Energy Technology side, again, similar aspects of asset monitoring, detection of anomalies, and preventative actions being taken. What we're working on is really providing that visibility now across the wing to wing by also incorporating Leucipa, incorporating Cordant around CCUS with our Carbon Edge.
These are things that for the operator provide insight and then also give them insight on the balance of plant. Further productivity and efficiency to bring down extraction at a lower cost or productions into the effective molecule at a lower cost.
Right, right, right. Lorenzo, like I said at the beginning, I've been meeting with a lot of investors the past 10 days. To wrap up OFSE, 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 OFSE 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. In particular, when you think of oilfield 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. 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. We are 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.
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 have been getting a lot lately. One is on tariffs. Maybe you can touch on that. What's the impact on Baker Hughes? What are you seeing right now?
We have a very diversified supply chain. Again, we have modeled various scenarios. Also, the direct materials that we buy that are impacted from tariffs are very small. We have buying and selling that takes place from different locations. We also have a large international content of where our shipments go. At this stage, we do not see a material impact from tariffs. Clearly, we are 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 have flexibility in our supply chain, and we have been through this before. Tariffs are not new to us, and we have seen them in prior administrations. We are navigating and working with our customers and partners and making sure that we manage the impact. At this stage, we do not see an impact.
Right, right. Plus, it's a fast-moving situation, right? We'll see how things evolve.
May change.
You'll obviously adapt your strategy to that, right? 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?
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. 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. Also from a Baker Hughes perspective, if we wish to evaluate any re-entry 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. We think that the energy demand is strong. Again, it's an all of the above is necessary.
From an outlook of Baker Hughes, if Russia is open, there's net upside, and it's something that we would have to evaluate.
Right, right, right. Lorenzo, I know we are running out of time. I'm looking at the clock right here. Let's focus on free cash flow a little bit. Clearly, you have 40% free cash flow conversion this past year. Guidance is 45%-50%, but we know your target is to get to above 50% free cash flow conversion, right? What steps are you taking to get there above 50%, right? When should we expect you to get there?
Yes. What we've said is through the period, you can see us from a conversion perspective at about 50%. When you look at the work in progress, it's really improving the way in which the billing cycles, the collections. Ahmed, in fact, has been running our free cash flow initiative for over a year. We feel very good about the processes being improved. We think there's still a lot that can be unleashed on the oilfield services and equipment side as well as we go forward. That comes from process improvements and being able to sustain that 50% free cash flow on a through period cycle.
Right, right. And you're returning 60%-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%-80%, that's through dividends, which we've maintained and increased even through the pandemic, maintaining them. Through buybacks, which are opportunistic at a time. We have 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%-80% to shareholders.
Okay. I think we are running out of time, Lorenzo. Maybe we can take one question from the audience if somebody has it. Otherwise, we'll just wrap it up over here.
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, 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. We are always going to be looking at ways in which we can upgrade our portfolio and continue to invest in new technology. That will be a continuing exercise.
Fantastic. Lorenzo, I think let's stop over here. We're out of time. Thanks a lot for the time and thanks a lot for the discussion.
Thank you very much.