EuroTeleSites AG (ETS) Earnings Call Transcript & Summary

[Audio Gap] 17,000 active lease agreements, we have reached 70,000 -- lease agreement we have reached in Q2 2025, that is one of the milestones we will talk today about. For all who has joined us for the first time, you see the question mark on your screen, you can already use that and raise the question platform. Well, first of all, at the presentation Ivo and Lars and afterwards you have the chance that we answer your Q&A questions. I'll hand over to Ivo [indiscernible] to start the presentation.

Thank you, Moritz. Thank you and good morning from my side. Welcome to the Q2 and half year results for 2025 from EuroTeleSites. Let's go briefly to the introduction. I think the revenue growth for Q2 was 4.8% in comparison to the same quarter in 2024. For the half year results, the number is a little better. We were up 5.3%, and this is mainly due to the inflation that we have in the master lease agreement with our anchor tenant, A1 Telekom Austria Group, which is always on the 1st of April of the year included. Then we also have the growth of portfolio, the sites that we've been building for them and for the third-party growth, which is one of our big focus through the year. On the CapEx side, we are very consistent. We have the 5G upgrades and rollout for the anchor tenant, which is called mandatory upgrades according to our lease agreement. And then also the rollout of the new sites that we will see a little bit later for the graph where we compare quarter-over-quarter, year-over-year how are we progressing. For Q2 of 2025, we built 62 new sites, 27 being greenfield, 35 being the rooftops, which netted 38 sites because some of them were dismantled. Most of the cases are rooftops in the large cities. As far as the tenant growth, we have been able to onboard the new third-party tenants, something that we are -- it's a good number, but we have to speed up for the rest of the year. Very good news from Moody's that confirmed the rating of EuroTeleSites just from the beginning and to continue with our digitalization from within the Sitetracker our asset management software has been live, and it's proven to be functioning very well, which will help us be more efficient and be able to run the projects better. The Farseer, which is the business planning tool that automates the financing processes is something that we're still working on and is going to go live in the next quarter. Next slide, please. So overall, some nice milestone, 13,700 sites, 17,043 numbers of tenants and then on the revenue, you can see on the bottom some of the financials where we compare '25 versus '24. So EBITDA is almost 84% in Q2 EBITDAaL 56.3% and the CapEx is very much inline what we have spent in Q2 2024. So you will have all this in the presentation, so we can continue. Now this is the slide that I mentioned regarding the sites that explains. So on the top left, you see the total number of sites, how we have grown from same period last year. We have 148 new sites. That's how we reached the milestone of 13,700, and on the right is the number of tenants. So we are doubling the number of tenants, which means that we are growing the third party significantly better. On the net debt is just once we roll out the sites, if we have some, which are decommissioned, some -- most of them are temporarily until we find the other location, only few were permanently decommission, dismantled, we see the net adds for June is 38. And then on the new tenants, you just see the split of the third party, which is 39 for June '25 and the anchor tenant, which is 38 almost. On the CapEx, the blue part is mandatory upgrades. This is part of the lease agreement where we have to prepare the site for the 5G for the anchor tenant for the equipment and as well bringing third-party tenants. We see that Q2 '25 versus Q2 '24 is almost identical. The rollout is something that we have done a little more. That means all the preparation in the previous year and previous months is now paying off that we are able to turn on the site. And comparison with 2024, you will see how that Q4 is always for us the one where we roll out the most sites and it is due to the all the procedures that have to be reached from the authorities, all the approvals, all the permitting before we can turn on live as site. And with this I will go to the next slide, where I will turn to my colleague Lars to discuss a little more the financial details.

Thank you, Ivo. Good morning from my side and a warm welcome. And you have seen the Q2 as well as the first half year 2025 has been a successful and solid year for us so far, and I will present to you the financials. I will actually first speak about the half year comparisons. And then secondly, I also will speak about the quarter-over-quarter. Let's start with the half year results 2025, the revenues that Ivo has mentioned already has been increasing from EUR 130.7 million to EUR 137.7 million, which is an increase of 5.3% driven by factors mentioned already, so of course, contractual inflation adjustments that also the growth and adds that we have been working on that leads to EBITDA of EUR 111.1 million in the first half year 2024 to EUR 118.3 million in the first half year of 2025. The EBITDA margin as you can see solid and stable on a very high level, namely 85.9%. On the next slide we will show you the EBITDA after leases because this is kind of pass through for us, you can see that there was a slight increase of 74.3% up to 79.7%, which leads to an EBITDA margin of 57.9% is also increase here in the comparison to the revenue growth, and also the EBITDA growth you can see that the maintaining of our costs is very solid, you can see that on the EBITDA level, but also after lease level, which means that we can first of all maintain the leases themselves, but also the new site are on the same margin and as those that we have already interest. That all together leads to a half year cash flow in 2025 of EUR 96.2 million defined as cash flow operations minus CapEx paid. And I think we can be quite satisfied with those numbers as well. The cash flow has slightly improved driven by the growth that I've mentioned, but also about the positive effects we have been seeing in the working capital. Those are the main effects that reasons the increase from EUR 85 million in the first half year 2024. On the next slide, we're now jumping to the Q2 2025 results, and there we are doing a Q2 2024 to Q2 2025 comparison. Here, you can see that on the revenue side, we have gained an increase of 4.8%, secondly the EBITDA is slightly below, which means that we are coming from EUR 56.7 million in Q2 2024 to EUR 58.8 million in Q2 2025, which is an increase of 3.7%, we have stated the reason, the reason you can see if you look back into Q1 2025, so you see a slightly higher EBITDA, so there was an effect -- even though effect shifted from Q1 to Q2 and that's why the comparison on central level is a bit lower and also the next slide where we talk about EBITDA after leases is a bit lower in comparison to the quarter-over-quarter. Revenues increased, we have reached an EBITDA after leases in the amount of EUR 39.4 million in Q2 2025 and gaining the overall cash flow in Q2 2025 of EUR 46.8 million. Having said so, this is a brief glance into the first actual month of this year, of course, we'll keep you posted, of course, please also have a look into our data book, which will published online, which many more details and having said this, we will briefly go into the guidance. The guidance is the out view until the end of the year, you all know those guidance chart, they are more or less unchanged excluding those factors that we have already implemented or have already reached. So the operational guidance, we keep what we have already expected at the beginning of the year. What we have already implemented as Ivo has mentioned is the software tool, the asset management tool went live in time and budget in May 2025. So we're working with the new tool since then. Financially it also unchanged. Moody's has maintained the investment grade rating; Fitch is on its way. So we expect an answer from Fitch in the late summer month, early autumn month and the rest of the numbers remain the same. So the CapEx that we will spend until the end of the year, is still expected to reach around 20% of the revenues with the revenue growth, you can see that the first half year was positive, and we so far keep the track that we expect until year end to grow at around 4%. And having said so, I'm handing back to Moritz. Thank you very much.

Thank you, Ivo and Lars. Now we are coming to questions and answers. [Operator Instructions] We already have the first question, and I will read them out loudly and afterwards we'll ask Ivo and Lars to answer them. The first question which we see is, what is the reason behind increase other expense to EUR 580,000 in Q2 from EUR 149,000 in Q1?

The reason behind, these are one time effect that we saw in Q2, which is it was linked into the dismantling of two sites that we have write-off after the dismantle.

Thank you. The second question, what is the reason behind increased other financial results, expenses to around EUR 2 million in Q2 from EUR 400,000 in Q1?

We already reported that in the interest of reducing our interest expense in the medium and long-term, we have done the refinancing that is for 2025 and that this will lead to the improved interest payments over the next 2 years, that's the downside effect what you can see here was that we had to write-off the release costs of the term loan that we have done before, so this is the one time effect that you can see in these categories financial results.

Thank you, Lars. Then one more question about the gross debt, can you disclose growth adds and churn for the third parties?

Sure, I think on this period we had 42 new tenants and only 3 of them had churn. And then on the last question.