And then in OFSE, in particular, the cost initiatives that we launched early here in 2024 will really help drive that margin upside into the back half of the year. And we expect the OFS business to average about 20% EBITDA margins in 2024. So, there is still a lot of macro and geopolitical uncertainty as we think about our ‘24 guidance and we also have concerns still about the aeroderivative supply chain tightness that we are managing through all of 2024 for Gas Tech. I would say also in OFSE, we see questions for us about the U.S. land market in 2024. But our view on guidance overall is really based on where we sit in the market conditions, where we operate, and so that’s really where we have come from as a source of our guidance numbers for 2024.
And we are taking what I would call a really prudent and balanced approach to our guidance. We have got a lot of confidence in our numbers, and we are working hard as we demonstrated in 2023 on predictability. So, I would say net-net, knowing what we know today, we think the midpoint of our guidance range appropriately balances all the risks and opportunities that we see across both the IET and OFSE businesses.
Luke Lemoine: Alright. Thank you.
Lorenzo Simonelli: Luke, I think the other thing I would just mention is it shows significant growth across both segments and continuing the trajectory that we have laid out very clearly with the targets set forth for ‘25 and ‘26 on the EBITDA rate as well as then the free cash flow. So, we feel very confident on the execution of the strategy that we have laid out.
Luke Lemoine: Okay. Thanks. And then maybe just to touch on it a little more, Lorenzo, the 20% EBITDA margin targets for OFSE in ‘25 and IET in ‘26. Can you walk us through how you see those business lines unfolding to achieve those targets kind of relative to your ‘24 guidance?
Lorenzo Simonelli: Yes. Sure. I will let Nancy walk through the details. It’s a combination of a number of things and actions that we have already put in place, so.
Nancy Buese: Yes. We remain, as we have said, very committed to those 20% EBITDA targets for both OFSE and IET. We have a clearly defined path on how we are going to get to each of those targets. And as we highlighted on the call today, there is a number of actions we are taking to make structural changes to the way we operate and truly streamline our overall cost profile and that’s going to really help aid that margin progression in the timeline we have indicated. And again, what we have said earlier this year about OFSE, we have taken those charges in the fourth quarter. Those are largely severance with a very short payback period that’s going to clear that path for the OFSE business to get to those 20% margins by 2025.
And they will also drive some good margin upside in the back half of this year, paving the way for us there. And then this is in addition to the more than $60 million of costs we already removed from the OFSE business following a combination of OFS and OFE at the end of 2022. And then also in IET, recall that we accomplished the $50 million of cost synergies by combining TPS and DS businesses in that same timeframe. So, when we think about the building blocks from the 2023 IET margin of 15% to 20% in 2026, that’s also a combination of steps. I would outline those as first is the conversion of higher-margin backlog with improved volume, improved pricing. Secondly, thinking about variable cost productivity in terms of supply chain, engineering, design and other areas for improvement.
We also in the industrial tech business plan to return to historical margin rates, which we have been working on. Also new digital offerings and enhanced services models in that space. And then finally, I would say base cost productivity which we have elevated R&D now, that will start to normalize and then also working towards further business simplification there. So, we have a path for both segments to get to that 20% margin rate. We are working that hard in a series of planned, calculated executable steps. I would say, overall, we are very proud of what we have accomplished so far. We are coming a long ways, but we know we are far from done, and we remain intensely focused on driving these margins and the returns higher. And ultimately, that’s intended to create much more value for our shareholders.
Luke Lemoine: Okay. Got it. Thanks Nancy. Thanks Lorenzo.
Operator: Thank you. [Operator Instructions] Our next question comes from Arun Jayaram with JPMorgan. You may proceed.
Arun Jayaram: Good morning. Lorenzo, Baker has guided to $11.5 billion to $13.5 billion of IET orders in 2024. I was wondering if you could give us maybe more details on the buildup of the order guide between LNG and other components. It seems like a theme of today’s call, the potential to book more non-LNG orders in IET and perhaps what factors would push you towards the low end versus the higher end of the guide?
Lorenzo Simonelli: Yes, sure. And Arun, good to hear from you. And we see another strong year of orders. And again, if you look at our history, this again would be a significant year for us. And in GTE, we see another strong year of LNG orders. We anticipate 65 MTPA of LNG FIDs. Just note some of those FIDs this year, we actually booked last year. But outside of LNG, we expect another strong year of onshore/offshore production where there are a number of potential FPSO awards and some good opportunities also on the onshore side as well. You have also got the continued momentum of booking outside of LNG orders and GTE in 2024 increasing by more than 50%. Services had a strong year last year. We signed over $1 billion of CSA commitments in the fourth quarter, and we expect to continue to see that contractual service agreement momentum to continue as the projects get near commissioning.
And you will also recall that we signed our service contracts closer to commissioning time of projects, which is coming into place. We discussed new energy and CTS expect $800 million to $1 billion of orders that we highlighted and continuing momentum in Industrial Tech, which should continue to progress in line with GDP. And I would look at overall IET order outlook remains strong, excited about the opportunities across all of our areas that we serve. And our midpoint $12.5 billion would still rival our second biggest order year in 2022 when we booked $12.7 billion of IET orders. So, continuing to see the momentum on the order side here.
Arun Jayaram: Great. Lorenzo, a follow-up on LNG, the permitting process on new LNG export projects in the U.S. appears to have slowed. I wanted to see if you can get some insights on why you think some of the approval process is taking longer, and any risk to your 2024 profile if these permit delays persist?
