Energy S.p.A. ($ENY)

Okay. Good morning to everyone. Welcome to this conference call to present the latest Energy Group's financial results. Unfortunately, the CEO, Davide Tinazzi has the flu, so he cannot attend, but obviously, CFO, Daniele Manfroi is present today. Just a reminder, this presentation is already available on the company website. So I'll leave the floor to Daniele.

Thank you, Federico, and welcome everybody. Federico, just confirmation if you can see the presentation on the screen.

Yes, yes. I can see.

Okay, thank you. So let's start. So as said, Davide will not be present, but I will try to do my best to do the full presentation. We will have a look this morning at the key effects of 2025 and with a focus on the Energy Group's evolution and transformation, which I believe it's quite tangible from the results and the information and the figures we will check, the market scenario, then the financial results and a glance -- an outlook of the looking forward, what will happen, what we think, and the Q&A section at the end. 2025 was indeed a new stage in group's recovery and diversification process. There are 4 main pillars to this sentence that have been proved even in a macroeconomic and market context that it's still complex by all means, by various factors. We try to -- and we also think that we have done a good job in adapt and be resilient on this situation and still trying to stick on the solid foundation that we're trying to -- and we are also working on for the group resilience and future. First of all, yes, it's clear we have matched the positive EBITDA despite the decline in revenues. And this proves that also last year 2024, strong choices and hard choices that we had to make were proven to be on the right track. In 2025, still, we are focused on some strategic investments. Of course, reduced since the previous year, but still focusing on C&I system and higher value-added projects. This is one of the main, let's say, contribution to the result of the year in terms of marginality. And we have done some completion of some already ongoing investments, especially in fixed assets to be able to fully exploit their functionality and their added value during this 2026. Innovation, diversification and integration. So 12 active R&D projects, also, I would say that mainly focusing on the cloud and integration and expansion of the product range availability on the commercial and industrial segment, especially. We have also worked on sustainability and cybersecurity. We keep on sticking to the ESG principle and plan that we have been launching 2 years ago and the NIS2 and ISO 27001 compliance. So last year, we achieved the certification of EnergyinCloud, the controlled software company. This year, we are working to reach the full group certification and compliance with the NIS2, which is underway. How the group has evolved? So we are clearly repositioning towards segments with better structural growth, high complexity and in general, niches and also segments in the market where we can express our added value compared to the mass market that we are still competing with. So the business model has been integrating more and more with the EMS, engineering and services rather than just focusing on the hardware. We see a market where in the best, let's say, situation where we can really make the difference, the customer are still wondering exactly what they need. So maybe there is an expressed interest and need for a best system, but then best system is something which is quite complex to compare, for instance, to the simple PV investments, which are also quite well experienced in the market. The best system to be perfectly fit into the customer need, need some engineering, needs some special customization, let's say, that we are able to make and we push forward with this ability. The target clients are also shifting towards the heavy mix to the -- sorry, C&I and APC a large customer. And the product range also has been expanding and will be expanded even more furtherly this year in the range of the extra large system and also by -- also integrating some solution that can be fitting into the small utility scale, which is also one focus for this current financial year. And regarding the geography, we have been keeping, let's say, the same ratio between export and domestic market, but we are really -- we have been focusing on the DACH market by opening up new opportunities and both in Austria and especially Germany and also Switzerland. There are still some factors, of course, impacting our results. So we must acknowledge that. 2025 has witnessed a slight drop in prices due to oversupply. So oversupply has not -- is not over. We see some changes in the PV market. But in the BESS market, we -- as of today, we say that it's expected that there will be the situation still running, let's say, maybe less consistently, but also last year and this year will also be affected by this oversupply. Way in way, I must acknowledge that the market is try to -- is not so homogeneous. Energy is proposing a new added value. And over time, customers are recognizing the difference and the USP that energy is proposing. So the culture of BESS and the basic knowledge of BESS are arising luckily. And this is, of course, something that we also foster and we try to reproduce. There has been, of course, we must say, a significant reduction in demand in the residential segment as well as 2024 already. And we also, during 2025, suffered the uncertainty on incentive mechanisms, especially Transition 5.0, Transition 5.0. And this created a strong delivery shifting of C&I, so extra large system in the second semester rather than the first semester. And also uncertainties are also arriving for investments are generated by slippages in regulatory definition. And I'm here referring to Net Zero Industry Act. So the main driver and also the best usage schemes. Normally, we still see also in 2025 that all investments by customers are focusing on self-usage. So taking advantage from the use of electricity -- on electricity produced by PV systems mainly and also peak shaving, arbitrage and other special services that we can enable through our systems are, let's say, still marginal because the regulatory and local, say, situations are not yet so clear, not yet so defined, well defined. There are a lot of announcements. But from the year-by-year, and this year will be probably marking a change, we believe and we hope that the situation will clear up and will make our added value, our possibility to offer additional services, multistack services will be also recognized by the market and will be also witnessed by numbers. So let's move to the financial results of the last year. The first tangible, let's say, result, I would say, of our strategy was an increase in EBITDA. So margin moving from minus EUR 16 million consolidated result to EUR 0.8 million consolidated result, which is the most, I would say, the most good impact that we could move on despite the decline in revenues, which has declined 20% compared to the last year. And so settling to EUR 29.8 million with a value of production of EUR 24.2 million (sic) [ EUR 24.2 million ] compared to EUR 38.7 in financial year 2024, so 12% reduction compared to the previous year. And the Group backlog at end of February is settled at EUR 12.9 million. We only account here for projects that can be delivered in 2026. And we, of course, we keep, let's say, as a side figure, the value of the largest contract, which is the ASFINAG contract. The net result was minus EUR 2.5 million compared to the minus EUR 17.6 million in financial year 2024. So this is also a result directly, let's say, deriving from the EBITDA improvement. And the net financial debt slightly increasing compared to 2024, EUR 9.9 million, which is mostly a result of liquidity -- I mean, cash reduction. Having a look at the revenue breakdown by geography, as I said before, so it's almost a balanced effect. So 61% in 2025 of domestic market against 63% of domestic market in 2024 and 39% totally export percent -- 39% compared to 37% export of 2024. So export share remains broadly stable and accounted for EUR 11.6 million. And regarding export characterization area, we still primarily focused and could deliver in Central and Northern European countries, in line with the strategy that we've been setting previously. Regarding product dimension, of course, that's really big result, I mean, the most important result because in 2025, only 53% of revenues were generated by residential system against 45% for the larger scale, it means above 50-kilowatt power of BESS systems and 2% of other revenues, which are mostly coming by services, which are engineering services. And in terms of -- in absolute terms, this means that we could deliver EUR 13.5 million. That means a 161% increase compared to 2024, where we accounted for EUR 5.2 million. So that was basically by expanding the customer base and also clearly, the ticket is much higher -- the single ticket compared to the previous situation. The total power, in fact, of system sold is 33 megawatts, which is higher than the 2024 value, thanks to the higher power that each single sale of the Extra Large system is bringing. And as of December 31, we account for more than 130 XL system and zero CO2 is our own brand for the -- for our product that we have launched 2 years ago. I think today, we are more than 150 because, of course, we account here also the registered and connected installations. So there's a lag between the sale itself and the connection with the systems. Normally, it takes some time. We both -- we know that we have been serving commercial activities -- commercial firms, industrial firms. There are maybe -- there's a slide maybe showing some examples later, but you can also follow easily our LinkedIn channel where we post our main installations and also agrisolar applications. The revenues breakdown by channels see a slight change compared to 2024 because we finally see the results, which is a consequence of the previous slide. The EPC other customers, which are the typical focus main customer for the large-scale application, of course, has increased almost doubled -- more than doubled actually from 21% to 43%. And with a consequence reduction on the value-added resellers. This value-added resellers are customers that in the past used to add some more hardware or their own software to our product as a component of their broader product, but in 2025, we are much more focused on being able to deliver and, let's say, products that are already ready for the market, and we're concentrating on this segment because, of course, we can have more -- we can transfer more value to mostly to the final end customers, and we can be recognized with more -- and acknowledge with more advantages also in terms of marginality. We have a look at some bridges now. Maybe the slide is a little bit small, I hope you can see enough -- wide enough. 2024 on the left side, where I must say that we have consolidated EnergyOnSite just 6 months was basically mostly affected by the cost of material, which was higher than 2025, EUR 34 million, EUR 0.2 million (sic) [ EUR 34.2 million ] and also, we added up also minus EUR 10 million of inventories write-downs, which made it quite particularly worse in terms of numbers, but we have done it on, let's say, with -- by clearing, wanted to address the situation. And we had a cost of service of EUR 5.3 million, personnel, EUR 3.7 million and other cost by EUR 1.5 million resulted to an EBITDA of almost minus EUR 16 million. And compared to 2025, of course, we had a different situation in terms of percentage and margin of cost of materials and inventories difference. And the cost of service is more or less the same. The cost of personnel includes the fact that we have a full 1 year also consolidation with EnergyOnSite. And the other cost, we have been managing to reduce -- make a small reduction to finally land to an EBITDA of almost EUR 0.8 million. In -- from EBITDA to net results, I will not maybe go -- just focusing -- I will just focus on the key figures. In 2024, we have a minus EUR 1.7 million depreciation and amortization against minus EUR 2.3 million for 2025. This is basically due to entering into force and entering into amortization of more assets there compared to the previous years -- previous year. While on the financial side, even though the scale is a little bit different of access, but it's been reduced from minus EUR 1.1 million to minus EUR 0.8 million. And then we have, of course, the tax effect from the previous year to this year, where we have not set some provisioning for future taxes by resulting in a net income of minus EUR 2.5 million compared to the minus EUR 17.6 million of last year. When we have a look at the trade working capital and the net financial debt, we see more or less a situation where we've been keeping -- we have some, let's say, effect, especially regarding inventory by having an overview, it seems that the inventory is almost same level as last year -- as the previous year and -- however, we -- in this 2025, especially we account for EUR 1.7 million of work in progress material, so that will generate revenues in 2026. And the total figure of trade working capital was decreased by EUR 5 million, mainly for the effect of the trade payables also -- taking advantage of more suitable, more convenient condition for payment with the suppliers. And at the same time, also, there is a reduction in receivables from EUR 6.3 million to EUR 4.5 million. That's basically mainly an effect of -- it's a combined effect from a reduction of volumes and also a different scheme -- payment scheme from the 2 segments, residential segment and the commercial and industrial market. Net financial debt, we can clearly see reduction in the medium, long-term debt, which we have fulfilled by following the payment scheme -- the payment plan and a slight increase on the short-term debt which we have been taking more advantage on, especially in the phase that we had to still, of course, we are still doing it -- the shift also of the inventories type from increasing the part of inventory and the procurement dedicated to the commercial industrial and at the same time, reducing the inventory section dedicated to the residential. And of course, the reduction on cash, which is mainly derived by the continuation even though in, let's say, less intensity, of course, compared to 2024, but still the continuation and the completion of the asset -- main asset investments, which will allow in this year to express the maximum production capacity, and also to reduce external services like external warehouse, which has already -- is bringing some advantages in terms of less cost for external services. Moving to the cash bridge analysis. We ended 2024 with EUR 4.7 million almost in cash by the effect of CapEx that you can easily see in this bar, EUR 7.3 million compared to the EUR 15 million of the previous year, especially dedicated to the finalization of the assembly line, construction of the new Gigafactory and technical developments on the cloud platform and new products. We -- I would like to underline in this investment, one really patent-pending new product dedicated to the off-grid, on-grid shifting for the C&I systems, and we have presented this new product to the latest exhibition in Rimini. And I would say this has been really much appreciated by the market and generating a lot of interest, a lot of prospects, a lot of new leads -- especially because by having a look around, that's actually currently the only system that we have -- we could see of that kind, basically making the best system become exactly as an UPS -- a giant UPS for the full factory or for full production line. This is especially useful for companies that are suffering from micro interruption or current spikes that can create problems in production or that can damage some assets like electronic boards. The other reduction of cash are, let's say, due to the medium, long-term debt repayment. And this is in terms of reduction in -- for all the, let's say, the debt that was longer than 12 months and the financial income expenses, as we said before, by ending cash and current period by EUR 1.7 million. And I must also underline that this suffers cash and current period suffers from a EUR 0.6 million payment, which was due by 31st of December, and we have -- that we have received actually in bank on the 5th of January. So in real terms, that could have been EUR 2.3 million. What are the strategic priorities for 2026 and the future years, of course? And we always try to give a longer view. And as we -- I hope you can notice that namely, we also try and we also stick on the priorities for a long time. So international expansion continue and will still continue, and we still believe that Northern Europe especially DACH market, even more than Dutch markets are representing and will represent a strong opportunity for energy in 2026 and future years. I recall that Italy and Germany currently in Europe, we are the 2 main countries where both by, let's say, energy for 2 different reasons, basically. Italy for a cost of energy, which is much higher than other countries in Europe and by availability of solar irradiation. Italy is very -- still a very important market for BESS and PV, while Germany is a very important market for grid services. There's strong imbalances into grid still in Germany, and the need for BESS is quite high to rebalance and really increase the flexibility of the grid. Then we will go ahead with technological innovation. We cannot stop to expand our services, our capability of delivering new services and also expand, as I said before, the range of product by introducing new product, more flexible and suitable also to the small utility scale and small grid scale application. Strategic partnership. Of course, we intend to reach a wider customer base, not only just by making a sale on one time, but to engage the customer for different and for further activities, further follow-ups in the future, namely, I recall here that way and way more, we are also focusing to offer maintenance services. We are focusing on offering expansion, offering hardware modification and adaptation to future possibilities that BESS can be awarded, thanks to the regulation changes, let's say, for instance, in February -- as an example, in February, the curtailment regulation has been extended to the BESS application. So this we expect will generate new services possible for -- even for existing customers that already have invested in our BESS solution Plus, of course, the cloud engineering services because normally, BESS is sold initially with the basic function or maybe with some additional like arbitrage function. But we are always working to increase the possibility to make available new services. We will invest in artificial intelligence and after sales processes in predictability of behavior -- cell behavior, for instance. And also, we have invested and we will launch this year with a new cloud platform by reviewing completely the previous one that we've been working so far, and we will keep it only for some dedicated customers. And of course, financial management, we will use more levers to better manage market dynamics and make inventories more efficient. I've taken 30 -- more or less -- slightly more than 30 minutes for this presentation. Maybe it's time for the Q&A answer, Federico. I just recall some annexes before we go on -- we jump into the Q&A in this presentation. So recent project reference, you can see here some projects. Honestly, they have been chosen. They are quite small projects. We can also -- but I invite you again to follow our LinkedIn channel to see more and also higher, let's say, capacity projects. And then we find the typical energy go-to-market, which we recall it's basically in continuity with the previous one. And then we have the shareholder base. Okay. I leave the floor to Q&A.

Yes. Thank you, Daniele. We can open the Q&A session. [Operator Instructions] Stefano, please go.

[Foreign Language] I have a couple of questions. The first one is just a clarification. I've seen that you took out from the order intake the [Foreign Language] of ASFINAG, which is about -- remaining EUR 20 million. If you could just give us a hint of how would you expect this to be exploited? And secondly, just about a feeling because given the current geopolitical uncertainties, we are all questioning about energy self sufficiency. And just your feeling about how this could eventually influence the evolution, not just for the photovoltaic sector, but also for BESS.

Thank you, Stefano. So regarding the first question, ASFINAG has a yearly planning. We -- at the time, let's say that there's a coincidence of timing. So before we can really, how can I say, cut and drop the plan of their annual planning in terms of installations, we want to be very conservative in this way. We have seen in the last 2 years, that the rate and the ratio of their activity is strongly depending in Austria also on authorization permits. The drivers, the dynamics that allow them to be slower or quicker in installation is strongly dependent on very local situation. So we learned that this mechanism is quite similar as in Italy. There's not so many much difference. So at this moment, we are just -- I think the -- in February time. So in March time, they have released their plan for this year. That's the reason why we keep this figure aside instead of bringing all the figure inside what we call the backlog for the year. It allows us to be quite clear with the market on what -- which is the backlog that we expect to be delivered this year with a quite, let's say, good confidence -- higher confidence and by keeping the ASFINAG quota a little bit aside to really understand what's the plan for the current year. But I can anticipate to you in general terms that we have been receiving the news that this year, most probably will be -- a plan will be released, which will be quite similar to last year. So actually, we are continuing the contract -- to develop the contract. And this is a very good news for us in the continuation of what has been done so far. And this will generate, of course, further revenues compared to what we can today recognize in the backlog. Regarding the international situation, so it's really -- on one side, it's really, of course, we have seen, but it's not a matter, I think, only for our business or for energy, but we see there are a lot of different news and situations that are being creating almost every month by combining regulatory, incentives and external factors like current energetic crisis in the energy sector, which can affect and can really affect our world. But honestly, 3 months ago, for instance, many of the news that we are -- and the facts that we can witness today are really -- were really not known or very unexpected or at least had a very low probability. So it's really hard to say what will be the effect. On one side, we expect the best business to be boosted by this. Of course, if I think, for instance, about self-sufficiency and independency from the energy fluctuation, energy prices for -- even for energy curtailment, which can happen more and more likely now today, I would say that investing in the best should be a really good idea, especially with the IGCU, which is the special application that we have developed for the on-grid off-grid seamless function. But having said this, also we can witness that there might be in the market, a shortage in liquidity. So that can drive -- that can be a driver against investment. It's really, really difficult to answer clearly to these questions. We can really -- we must really say that we are ready for any scenario. For both scenarios, we can -- we must be resilient and flexible, I would say. That's the really most critical feature and attitude that we must keep. I hope I answered these very difficult questions.

I don't know if there are any questions. Maybe not. So we can thank you, everybody, to join this call and many thanks to Daniele.

Thank you, Federico. Thank you, [indiscernible] and thank you all the participants for joining.

Thank you. Bye.