Global Dominion Access, S.A. (DOM) Earnings Call Transcript & Summary

Good morning, and welcome to the presentation results of Dominion. [Operator Instructions] Before starting, I would like to remind you that once the presentation is over, and as usual, we will move on to the Q&A session. [Operator Instructions] So we're going to kick off the presentation. We have Mikel Barandiaran; Roberto Tobillas, who is the Director General; and Patricia Berjon, who is the Director for Corporate Development.

Good morning, everybody, and many thanks for attending this call for the first half of the year 2026. And yesterday, when the market closed, we published the documentation with all the information on what the 6 months have been like. And where several conclusions can be drawn that I would like to underscore just to kick off with this presentation. Well, for us, let's say that as a summary of these first 6 months, one of the most important things is that quarter after quarter, we're seeing how recurrent businesses, in other words, GDE and GD Services are growing organically, and they're doing so above the guidance. And this means that the company is growing organically on the whole, although as we pointed out in Q1, the project segment is still affected by the current economic situation. In other words, we can see that the core segments, those that really have a weight in excess of 85% of our business that are growing in a sustained manner and with high single digit. And the second important thing is that we're still advancing a lot in the simplification of the company, which is one of the pillars of our current strategic plan. Let's say that as a landmark for this quarter, we have initiated the sale process of the renewable infrastructure in Argentina. And this is also added on to the different divestitures activities and infrastructures that we initiated in 2023. And it's obvious that this means that we have lower levels of turnover and less results. But in any case, it's a necessary process that was to achieve more returns in the future. In other words, this comparative snapshot that is perhaps a little bit more ugly because it has to explain what is the price that we have to pay in the short term because we want to build the company in the long term. And this strategic plan is going to finish, and we're going to be moving on to the '27-2029 strategic plan. So in other words, with a much more simplified and much more focused company, we will focus more on growth that is produced by the tailwinds of the energy transition, the digital industrial transitions. And with these 3 ideas, we're going to be looking into the details of these different elements. As I pointed out before, and in order to analyze the figures in the segments, we have to bear in mind this simplification process. In other words, the strategic divestments that we are carrying out together with the process for the sale of biomass in Argentina as well as the acquisitions of companies in our buildup process in the area of the environment. But let's just review them. As regards to divestments, we have mainly the sale in December 2025 of the industrial activities in France. That is the virtual mobile operator, TTB, a portfolio that has been transferred progressively since the first quarter of 2025. And then we have the Masorange connection shops, which started in January 2026. As regards to acquisitions, you know that we've made several acquisitions in the environmental area. And we -- in Q3 of 2025, we integrated the decarbonization business in Germany. And in the month of June, the Spanish company ,a circular economy in Spain has diversified our capacities in terms of industrial waste. And as regards to the classification of the biomass plant or what they call activities for sale, this for the financial statements means that we are subtracting EUR 5.9 million in turnover, EUR 2.6 million in EBITDA or the contribution margin, if we take into account the different segments, which means that we have an interruption here along these lines. And this impact is linear. So that you can make your forecast for the next few quarters. But in order to cover these effects and in order to correctly interpret the financial statement with the results we're presenting here, what we've done is reexpressed the accounts for this quarter so that we can include the same period that we're talking about right now. So therefore, let's now talk about the first half of the year. Well, we've closed with a business figure of EUR 497.2 million, which means that we've had positive organic growth of plus 0.05% at a constant currency compared to the first quarter or the first half of 2025. And what we've done is discounted the inorganic effect that subtracts 7.5% and the exchange rate effect that has a negative impact of minus 1.1%. In other words, we've had positive organic growth even in a very complex macro context. As regards to profitability, the semester EBITDA stands at EUR 63.2 million, which means that the EBITDA margin is 12.8% over sales. And here, there's been a slight slump compared to the comparable period that can be explained by the reduction in weight of the GDT projects in the mix, which is the segment that has the largest margins. Now moving on to -- so we have this part that has to do with projects that have an influence on the business mix, and we also have the fact that biomass that also has high margins above the average figure is now covered by interrupted activities in the financial. And then we have the recurrent businesses, GDE and GDT services are still behaving in a solid manner, which confirms the better quality of the business mix that has been reached in recent years and reinforced our capacity to generate cash even in environments where there's less growth. And the central structure is overhead, it's 2.6% of sales without major variations throughout the quarters, which shows that the group has operational leverage and amortizations do show a slight increase as we saw in previous quarters. And in order to move on to the last line of result, we have a very positive aspect of the half year as regards to financial results, which is about 50% compared -- that is reduced, sorry, by 50% compared to the same period of the previous year and now stands at minus EUR 15.1 million. And this improvement has improved our financial expenses. There have also been improvements in the rates of exchange and a relative correction in the photovoltaic assets of the Dominican Republic. So that means that the net results increased from EUR 2.2 million to EUR 7.1 million. And this profit nearly reaches EUR 11 million if we exclude the renewables infrastructures that are for sale. So in other words, the end result once we have divested these infrastructure is going on carrying on. So let's take a look at each of the segments. But let's start off with Global Dominion Environment, our environmental business, which closes this semester with a business figure of EUR 221.5 million, which means that it's a growth of 9.8% of organic growth. It is the segment that has grown most than the 1 that had also concentrated most of the divestments because of the sale of B2C businesses that are not strategic. The contribution margin reached to 17.5% of the sales for the first 6 months of the year, which shows that we have more operational profitability of most of the activities and services represents 45% of the total sales and 51% of the group's contribution margin. And in Q2 in this segment, we have carried on reinforcing our position in the sector of electric grids, boosted by the electrification process, which means that we've signed new contracts with good margins. And as I mentioned, would have to be made about the extension and improvement of the agreement with Endesa in Spain for another 6 years. And finally, we have GDT project. That closes the first half of the -- with a business figure of EUR 51.4 million with a contribution margin of EUR 10.3 million. And as we pointed out at the beginning, this geopolitical instability has reduced the trust of businesses and means that people are more cautious in terms of global investments. And this explains the lower level of activity in this segment compared to the previous year. And we also have to compare the projects with 2025, which was a very strong period. As you know, the projects are not linear, but rather they are based on turnover milestones. So we could not really find significant data if we only focus on specific or short periods of time. So therefore, the snapshot for 9 months will not have such a sharp impact. Although what is relevant is that we have maintained the solidity of our portfolio with a backlog of EUR 369 million. And once again, without any cancellations of projects to date. And mention has to be made of the signing of an agreement for the new project of the Puerto Cortés Hospital in Honduras that could kick off at the end of this year or perhaps in 2027. So let's move on now to the balance sheet. Let's say that the balance sheet for this half year has the effect of the perimeter changes because we've consolidated the assets or the acquisitions that the company has carried out during this first half of the year and also because we've made available for sale biomass in Argentina. So as a consequence of this, we have deconsolidated its assets as well as its liabilities that can be seen in the accounts whose net value is of EUR 22.9 million. and the net financial debt remains practically stable. And when we closed in 2025, we ended up at EUR 135.9 million. And the main movements in this figure when apart from biomass are also related to M&A operations that is current operations and operations that took place in the past. So we'd be talking about something like EUR 11 million in disbursements and with the seasonality of the circulating capital, the working capital. Well, there's been a variation in working capital of EUR 39.3 million, which is the end result of the inclusion of the net assets of the biomass plant in Argentina. And because of the conversion differences into [Finnish]. As regards to our equity, we've incorporated the benefit to the profits of this half year, EUR 7.1 million, and the dividend that is -- that was paid in July -- on July 9, EUR 8 million, and the payment of the dividend to minority shareholders. And as a conclusion, well, there's been a positive evolution because there's been organic growth above the guidance in our recurrent sectors that is GDE and GDT services, which shows that the strategy is completely valid. And secondly, this project segment is still affected by the situation, the current macroeconomic situation, although there could be an activation at the end of the year. And then in this quarter, well, we've carried out another of the simplification stages with the sale process of biomass in Argentina. So in other words, we're going to be facing the last part of the year with more visibility in recurrent activities, and we believe that there could be a certain amount of reactivation in these projects so that we can go back to the lines of execution that are much more in line with what we've done in the past. So this is where the analysis ends, and we're going to be moving on now to your questions. So thank you very much for your attention.

[Operator Instructions] Firstly, we have Carlos Treviño from Banco Santander.

I have a couple of questions. The first one, in Q1, you were talking about EBITDA of about EUR 150 million. So do you still think that you're going to remain at those levels? And then I'm surprised to see looking at the backlog, I'm surprised to see the weakness of new orders because according to my ratio has only been EUR 3 million in Q2 and EUR 4 million in the first quarter of the year. So if you take a look at the pipeline, do you think that this is going to speed up? Or do you think that the current context is going to penalize us still? And I understand that in these figures that have not been included in the backlog, the hospital in Honduras, you signed the agreement, but I suppose that there's no firm order.

Well, as regards to EBITDA. Well, as you know, this is an estimate because I think that -- I think that in Q1, what we said is that at this point in time, and bearing in mind that it's the last year of the strategic plan, we were significantly increasing, but apart from the recurrent EBITDA of the company, which we think is about EUR 155 million, which were fully guaranteed. Although there could be difficulties that we are all familiar with, and that there were EUR 25 million that depended on the project area. So this is dependent on how we executed this project portfolio. And as you can see in the backlog, they are available and what we have to do is carry all of these things out. And it's very difficult to forecast to know what is going to happen in the future because, yes, we know that there are going to be positive things once the summer is over, but I cannot guarantee everything, of course. But in any case, I think that we are very close to achieving our goals. But as regard to the project portfolio, yes. Yes, we've incorporated very few new projects. We haven't included 1 of the projects that was included by mentioned by Patricia, but we're not going to do so until we sign the loan agreement so that we have an absolute guarantee that we are going to be paid. And which would happen at the end of this year. And if not, it would be -- if we move on to the following year. And as regards to renewables, we have not included projects in our backlog on our pipeline until we have total guarantees from the company that is buying our projects so that they can be executed and that's where we stand. Any more questions?

No, that was it.

Well, let's say that in our pipeline, we only reflect those things where there is a commitment. And we are being much more conservative when we deal with our pipeline. It doesn't mean that we have got a much more extensive pipeline. And we have the example of Puerto Cortés, even though the agreement has been signed, we have not included it until in our pipeline until the execution has agreed to.

Luis Padrón has the floor now, please. From GVC Gaesco.

Good. Wonderful. I've got several questions because do you -- do you know when it is you're going to be presenting the update of the strategic plan? This is 1 of the questions I had. And the second question has to do with the sale of assets. In other words, the issue of Cerritos. And perhaps could you give me a timing as regards to the possible sale of biomass in the -- in Argentina, the biomass plant. And then as regard to projects, and bearing in mind the results of Q2. As far as trends are concerned, have you seen any kind of changes or do you have problems with the funding or I don't know? Or could you please be a little bit more specific about how projects are evolving. And that's all for me. Thank you very much.

Well, thank you very much, Luis. As regards to the strategic plan and its presentation, we've not yet confirmed a date. So let's say that we are still focusing on the logistics. But in case, we'll be talking about, I don't know, the second week of November, for instance. And that is our intention, but we'll let you know as soon as we possibly can. . And as regard to projects, we are currently looking into, as I said previously. We want to achieve levels of execution that perhaps will not be reflected in Q1, but perhaps they will appear in Q4, which would be very similar to what we've done in the past, too.