Ferrovial N.V. (FER) Earnings Call Transcript & Summary

Good afternoon, everybody. This is Silvia Ruiz speaking, and I would like to welcome you to Ferrovial's conference call to discuss the financial results for the full year 2022. [Operator Instructions] I am joined here today by Mr. Rafael del Pino, Ferrovial's Chairman; Mr. Ignacio Madridejos, Ferrovial's CEO; and Mr. Ernesto Lopez Mozo, our CFO. With this, I will hand over to Mr. del Pino. Rafael, the floor is yours.

Thank you, Silvia, and good afternoon, everyone. Ferrovial showed a solid performance in its main assets in 2022. In toll roads, the U.S. managed lanes posted a strong revenue growth in the year on the back of higher traffic and double-digit revenue per transaction increase despite lower GDP growth. 407 ETR registered a significant increase versus 2021, following the lifting of the restrictions in Toronto, but with a slow return to the office. The Airport division also showed the relevant traffic recovery. In the U.K., Heathrow and AGS had a steady improvement versus 2021 since the removal of U.K. travel restrictions in March. And Dalaman in Turkey showed a great operating performance with traffic at the end of the year above pre-pandemic levels. In construction, the inflationary pressure has been actively managed through mitigation measures, getting an EBIT margin of 1%. In terms of order book, the figure ended the year at an all-time high, reaching EUR 14.7 billion. This positive operating performance has been combined with important development ratio at the end of November. We also increased our exposure to I-77 managed lanes by acquiring an additional stake in November. Ferrovial has been prequalified for the SR400 managed lanes project in Georgia, also in the U.S. The construction works for the extension of the NTE 35 West, NTE 3C in Texas are advancing according to schedule, and the opening is expected for September. In airports, Ferrovial acquired a 49% stake in JFK Airport New Terminal One in New York and completed the acquisition of Dalaman International Airport. And lastly, at the end of 2022, Ferrovial reached the completion of the Amey sale ending the divestment process of the services division. An actual step further in our international growth is to list Ferrovial in the U.S. We will propose for approval to our AGM, a corporate reorganization followed by an application to list ordinary shares there. In terms of cash, we finished the year with a strong cash position, reaching EUR 1.4 billion, thanks to dividends collected from our main projects and the positive impact from advanced payments in construction. The cash outflows were driven by the good reasons related to all the investments for future growth that we have just mentioned in the form of acquisitions and equity injections in new projects. The shareholder remuneration reached EUR 578 million. ESG keeps being fully aligned with our business strategy. I would like to highlight the advances in terms of Scope 1 and 2 emission reductions on the back of renewable energy production and procurement. Other important milestones in 2022 were the update of our human rights policy that was approved by the BoD and also Ferrovial becoming the first infrastructure company to receive the Good Corporate Governance Index by AENOR. In the following slide, we'll review some of the main figures of the year. Revenues stood at EUR 7.6 billion on the back of higher construction revenues and higher contribution from toll roads. Construction order book reached an all-time high at EUR 14.7 billion, with 45% coming from North American projects. Dividends from infra projects reached EUR 475 million. Gross investments of EUR 856 million with the I-66 taking the biggest share amounting to EUR 322 million. Gross divestments in the year totaled EUR 429 million, highlighting infrastructure services in Spain for EUR 175 million and Amey for EUR 132 million. And the net cash position ex infra projects reached EUR 1.4 billion. Now Ignacio will review Ferrovial's strategy and the 2022 results by business unit. Ignacio, you have the floor.

Thank you, Rafael, and hello, everyone. Let me start giving an update of -- on our Horizon 24 strategy. We continue with our vision to develop and manage sustainable, efficient and innovative infrastructure for a wall on the move with a focus to grow in the U.S., our main market. In Virginia, we contributed to reduce congestion in the great Washington area by the opening of 22.5 miles of new managed lanes in the I-66. It will follow this year with 6.7 miles of new managed lanes in the 35 West in Fort Worth, supporting one of the main logistics hubs in the U.S. We continue developing a pipeline of new managed lanes in the U.S. This year, we will bid for the SR400 in Atlanta together with other 2 prequalified bidders. We also increased last year our exposure to I-77 in Charlotte with acquisition of an additional 7% stake reaching 72%. And we took a 49% participation in the consortium appointed to design, build and operate the New Terminal One at JFK Airport. Outside the U.S., we participated in selective infra investment with acquisition of a 60% of Dalaman Airport in Turkey. We almost completed the divestment of our Services division with the sale of Amey and the infra services in Spain to concentrate on developing infrastructure and continue with our strategy of rotating mature assets with the sale of a 15% of household and the completion of the sale of Algarve. In new businesses, we will open this year our first 50 megawatts photovoltaic plant in Spain and a new transmission line in Chile, while we continue growing our pipeline in water projects and energy solutions. Last year, we also increased our shareholder remuneration, including share buybacks to EUR 578 million. And finally, sustainability is at the core of our strategy, helping us to capture new contracting opportunities, for instance, related to energy efficiency, be more competitive in our bid in the U.S., thanks to our collaboration with disadvantaged groups and growing while reducing our carbon footprint. We are progressing well in our main sustainability KPIs where Scope 1 and 2 absolute emissions were reduced by 25.4% compared to 2009 and was 3.6% lower than previous year. 70% of electricity consumption was from renewable sources. Our water consumption was reduced by 29.7% versus 2017, with 125x annual compensation and 23% of personnel women in leadership roles, 2.8%, 12 points better than previous year. We reduced the number of fatalities but increased the serious injury frequency rate. We were hard to get all people working with us to go back home safe every day. Regarding EU taxonomy, still there is a lot of uncertainty about the criteria to be used to measure it, following industry standards in which transport infrastructure with low-carbon measures. Following the awarding of the taxonomy are included, our eligible revenue is 84%, but if we do not include this infrastructure, it will be 40%. In the case of alignment in the first case, it is 54% and in the second 25% of revenue. Last year, we reinforced our position in all main sustainability indexes, renewing our presence in the Dow Jones Sustainable Index, FTSE4Good, CDP, Ethibel, Bloomberg Gender Equality Index and Vigeo, among others. We are well-positioned in an inflationary environment. 82% of Ferrovial's value assets have pricing frameworks allowing to increase tariffs above inflation. On top of that, we'll have other assets like Heathrow and other toll roads like IRB and relevant partner construction linked to inflation. We are also well protected to an increasing interest rates because most of our debt is hedged or with fixed rates and long-term. Also, our infra assets after limited construction and ramp-up risk should reduce their discount rates. Now moving to our toll roads division. Last year, we increased our toll roads revenues by 22.4% and EBITDA by 21.6%. This data does not include equity accounted assets. The U.S. projects represent 78% of toll road revenues and 91% of EBITDA and supported last year growth with 44.5% revenue growth and 45% EBITDA growth in euros. Total dividends from toll roads were EUR 388 million, EUR 237 million from the 407, EUR 92 million from NTE and EUR 31 million from LBJ actions. If we move now to the 407 and Toronto area, traffic in the 407 has improved 30.5% and EBITDA of 32.6% compared to 2021. Average revenue per trip increased 1.5% versus 2021, supported by longer average trip length of 2.4%. As commented previously, the 407 distributed a total of CAD 750 million during the second half of last year versus CAD 600 million previous year, showing a very robust asset. It has a strong financial position with cash and equivalents of CAD 370 million and undrawn credit facilities of CAD 800 million with no significant maturities ahead. Traffic in the fourth quarter last year was 13.5% above previous year and minus 14.7% compared to 2019. For the whole year, traffic was 30.5% above 2021 and minus 19.3% below 2019. Traffic was affected at the beginning of the year by lockdowns related to Omicron wave with a slow reopening throughout the year. Mobility in Toronto last quarter was affected by the calendar effect of workdays and the seasonal effect increase after the pandemic or production of mobility close to holidays and days of bad weather. However, the trend to return to office continued in Toronto, like other North American cities, and it may impact positively in days without winter and holidays effect. The 407 was also affected by the end of construction work in the 401 during the month of November with an increase in capacity compared to previous months. Like previous quarters, traffic during weekends recovered faster than workdays. Last quarter, workday traffic was 18.9% lower than 2019. Network congestion is expected to grow in Toronto area. Canada's immigration plan targets to increase around 500,000 permanent residents per year until 2025. And historically, more than 40% of that population goes to Ontario with GTA absorbing most of it. This new population will live and work mainly around the 407 as we can see in the map with the major employment zones in Toronto. We confirm our strategy of delivering value to our customers, offering a reliable alternative in a very congested corridor and continue monitoring traffic to decide when to increase tariffs. We are confident about the long-term value of the asset. Moving now to the Texas managed lanes, we can see the revenue per transaction of the 3 assets with growth versus previous year of 18.8% at NTE, 11.8% at LBJ and 20.7% at 35 West. In January 2023, soft cap was increased by 6.5% in the 3 managed lanes. Traffic last quarter of the year was 12.7% above 2019 at NTE, 4% at 35 West and minus 19.5% at LBJ even if the last 2 were affected by construction work in the area. Compared to previous year, EBITDA was 30.4% higher at NTE, 24.8% at LBJ and 16.4% at 35 West with margins above 80% for all of them. Probably, this is the last time that we present this slide, but it is a good way to illustrate that all our U.S. managed lanes outperformed in revenues versus pre-COVID levels, excellent performance of our U.S. assets, supported by the value giving to our customers who appreciate the time savings and the reliability of our managed lanes versus congested alternatives in very dynamic urban centers. A good sample of our dynamic urban center is Dallas-Fort Worth. It continues attracting new businesses like Samsung, Goldman Sachs, or Wells Fargo. Employment grew 6.1% last year versus the 3.2% average of the U.S. Industrial leasing continues very robust, and the area leads the country in industrial development with a 3.1% GDP growth, 0.4 percentage points above the U.S. GDP. Dallas-Fort Worth area is expected to grow from 8.2 million people in 2023 to 11.4 million in 2045, increasing the number of jobs from 5.7 million to 8.1 million in 2045. We move to the I-77 on next slide. The project increased revenues and EBITDA versus previous year by 67% and 91%, respectively. Revenues per transaction grew 43%, supported by higher toll rates. We took advantage of the opportunity to increase our participation in the asset and pay USD 109 million to acquire an additional 71% to reach 72.2%. Expected returns highlight past investment with similar risk. The region keeps growing, attracting new jobs with a 4.9% growth in employment last year. Charlotte consolidates as the second largest banking hub in the nation after New York City. Segment 1 of the I-66 was opened 4 months in advance, and the full managed lane was opened November, also ahead of schedule despite COVID and supply chain disruption. We will report traffic and revenues with first quarter results, but the asset is ramping up in line with expectations. I-66 has the advantage of a flexible pricing framework with no stopgap and freedom to set heavy multipliers. It is an area with a higher household income than Dallas-Fort Worth, and it is growing, bringing new employment to the region. The pending investment for this year is EUR 55 million, mainly working intersections, bike lanes and landscaping. Total equity injected by Ferrovial until now was EUR 857 million. IRB had a good 2022 increase in revenues, 10.7% and EBITDA 14.2% in euros. Main assets grew traffic with double digits and toll rates are linked to inflation. IRB improved its corporate ratings to AA minus by Fitch and was able to refinance some assets. There's a huge pipeline in India. Last year, IRB won the Ganga Expressway, a 36-year BOT and also a 50-year HAM. This year, there is a relevant allocation of funding to transport and roads and IRB was recently selected preferred bidder in a new BOT. IRB enhanced its ESG last year by being a member of India Global Compact and by issuing a sustainability report. IRB implemented new corporate policies following global best practices. Now moving to the airport business. Heathrow revenues grew 140% last year, and EBITDA reached GBP 1,684 million. Last year, traffic at Heathrow reached 61.6 million passengers recovering from COVID restrictions. This is 23.8% below 2019, although December closed with a traffic 11% below 2019. The recovery last year was driven by outbound leisure although we are seeing a recovery of inbound leisure and business travel which in the last quarter of 2022 was 28% of total passengers versus 32% pre-pandemic. The regulation is more than a year delay. It is difficult to understand why the CAA is taking so long. This uncertainty and returnees are not good for investors, and it may affect the service that passengers expect. We hope for CAA final decision corrects the errors in the CAA's forecast of key regulatory building blocks. After the final decision, Heathrow and airlines have the option to appeal to the CMA. AGS improved revenues, traffic and EBITDA compared to previous year. Traffic was 9.2 million passengers, 164% above 2021, but still 32.5% below 2019. Dalaman traffic reached 4.5 million passengers, only 7.5% below 2019, but the end of the year was above pre-COVID levels. U.K. passengers represented 46% of total and constituted most of Russian and Ukrainian tourists. The New Terminal One project is on schedule and on budget, although still it is early days. Our equity contribution last year were EUR 59 million. Looking at the construction business, we ended 2022 with EUR 144 million operating cash flow and a positive activity cash flow supported by advanced payments in Canada of EUR 160 million. Margins were flat compared to previous quarters, and we closed the year with a 1% EBIT affected by the inflation impact of suppliers and subcontracts. Our order book reached an all-time high, and it is mainly concentrated in North America that represents 45% of our backlog, followed by Poland that represents 22% and Spain, 15%. We do not have visibility today of similar advanced payments in 2023. We continue working to achieve our Horizon 24 target or 3.5% EBIT margin. And Ernesto will continue with the main financial figures.

Thank you, Ignacio. Hello, everybody. Looking into the financial results below the operating lines that were discussed by Ignacio, I go into the financial results from infrastructure projects. And there you see a growth vis-a-vis last year. Part of this has to do with perimeter. Remember that we acquired a further stake in I-66 at the end of last year. We consolidated the asset that has opened 2 operations along this year. And therefore, we are accruing interest that were beforehand capitalized. Also, we have some additional expenses from Autema that are exposed to inflation have been discussed in other calls. Regarding ex-infrastructure projects, we have a positive result compared to last year expense. This has to do with the unwinding on hedge for bond issuance. And you see that we have a net cash position that in 2022 didn't accrue much in interest given the low rates in the euro. But now in 2023, you're starting to see interest accruing across the board. Equity accounted affiliates show a positive result, well thanks to the contribution from 407 ETR and IRB. And we don't have negative impacts from Heathrow or AGS. They have both improved, but we are not incorporating any result from that due to IAS 28. Corporate income tax is in line with the corporate tax rate. And the result from continuing operations comes up to EUR 238 million. Remember that last year, we had the positive effect of the revaluing of the holder stake in the I-66 after the purchase of a controlling stake. In terms of net profit from discontinued operations, we have a positive EUR 64 million that is related mainly to the divestment of the services business. Moving on to the cash position. We see dividends from projects helping for cash generation. I mean these are basically from toll roads. You have a broader portfolio of toll roads Spain dividends and you have a portfolio that is growing and will bring more dividends in the coming years. There's no dividends from airports though. Heathrow has been the levering through the pandemic, and now it's at the similar levels or even better than pre-pandemic in terms of net debt to RAB but it's not paying dividends and it's awaiting regulation that Ignacio explained before, long delay, by the way. And in terms of EBITDA and working capital evolution, we see a slight drop from working capital. Then a taxes payment that is basically related to Poland, also some payments in Spain and Canada, but is not recurrent. Then we have investments in the different infrastructure, mainly I-66, but also airports. And this is a good reason to draw cash. I mean, basically, these investments for growth in the different assets that we mentioned along the year and divestments related to services mainly. And then we have shareholder remuneration that as you see is even above pre-pandemic levels. In terms of other financing flows, you have the net cash that is deconsolidated after sale of some assets and also some minorities distribution that is in Budimex and FX effect. The EUR 1.40 billion basically rounding up net cash position does not include vendor loans from the sale of Amey. We have close to EUR 190 million that are not reflected in the net cash position because they are expected to be cashed in, in more than a year. Okay. So we move on to the next slide. I will pass on the microphone to Ignacio to discuss this transaction.

Thank you, Ernesto, and I move to comment about the corporate organization to align our corporate structure with our international profile. We are an international corporation with most of our business outside the Spain. Last year, 82% of our revenue was generated outside of Spain, and 90% of our equity value is international according to research analysts. You see most of our future opportunities and growth will come from international markets, in particular, the U.S. and international institutional shareholders represent 93% of our institutional investor base. Listing in the Netherlands enhances our internalization while maintaining our Spanish routes. The Netherlands is a country of choice for companies with a strong presence both in Europe and the U.S. [indiscernible] listed company may facilitate future listings in the U.S. The Netherlands is AAA rated with a stable and trusted regulation and a sound corporate governance framework. It will [indiscernible] enhancing our European and international profile, brand awareness and access to international talent. Later, U.S. listing application is a natural step for us, consistent with our portfolio and our pipeline and could bring additional benefits. U.S. and Canada are one of the largest transportation infrastructure markets worldwide. We are currently a leading player in the region with a phenomenal track record of value creation. U.S. and Canada are the markets with the highest growth potential for us. Listing in the U.S. will give access to the largest investor base globally, and we shall benefit from scarcity of public companies with U.S. infra assets linked to inflation exposure duration and growth. U.S. listing will also contribute to further attract U.S. talent and enhance our brand awareness in the U.S. helping to extend the pipeline. Nothing will change in Spain or other countries. We will continue with our investment plan in Spain. We'll continue hiring Spanish talent to support our Spanish and international operations. We will continue being listed in Spain. Now Ernesto will explain in detail the transaction to be approved at the shareholders' meeting.

Thanks, Ignacio. So basically, this is a reverse merger of Ferrovial, S.A. into Ferrovial International. This is Societe European -- European Society is based in the Netherlands, so that's SE. This company already holds 86% of the assets. Therefore, Ferrovial International, the new Ferrovial SE will become the HoldCo of the group, and it will be a change one-for-one. There's no dilution whatsoever. Also, this is a change in corporate domicile from Spain to the Netherlands. Dual listing in the Netherlands and Spain and we'll apply for listing in the United States at a later stage. I mean this is ordinary shares and the Netherlands allow for the possibility of connecting in the future with a potential dual listing. This fact that we have ordinary shares also allows for a potential inclusion in the future in indices in the U.S. We don't expect impact on business and strategy or investment plan, organization or day-to-day operations. This is the same company. Spain is expected to remain key source for developing talent. But of course, we also plan to add international talent along the way. The transaction is subject to shareholders' approval. If shareholders vote against the transaction, the ones voting can exercise a separation right. So the completion of the merger is conditional to total separation rights exercised not exceeding EUR 500 million as well as, of course, having reasonable assurance of dual listing in the Netherlands and Spain. Corporate governance in the Netherlands is in line with current practices, say, for changes driven by local statutory law or market practice. But there's no changes in voting rights contemplated, no change in the Board. If we move to the following slide, we basically don't change the shareholder remuneration policy. If separation rights were to be exercised, the shares repurchased this way could be used for shareholder remuneration. [indiscernible] investment grade rating remains a priority. And part of the transaction, if the merger goes ahead, the outstanding EUR 500 million hybrid loan bond is expected to be repurchased. A replacement for this hybrid would be sought in the future when markets conditions are more stable and more favorable financing terms are achievable. We don't expect any other financing -- refinancing need because of this transaction, except for the eventual separation rights. In terms of timetable, well, we announced today the approval by the Board and the timeline is expected to happen early in the second quarter, but it could go -- slip into the third quarter. So we expect to have the AGM and the merger completion in the second quarter, as I said, it could slip into the third quarter. After the merger, we'll apply for listing in the U.S. post-merger completion. And after bidding for the SR 400 and I mean, if successful dual listing happens, we plan to have our Capital Market Days after all these events. Okay. So this is the description of the reverse merger that we will be subjecting to approval in the AGM. And now, let me hand it back to Rafael.

Thank you, Ernesto. So finally, after review of the year, we remain confident on the significant growth to come when looking ahead on the back of the following pillars: first, the significant cash generation to come from increasing dividends from a strong asset portfolio with new toll roads distributing; second, value creation through pricing flexibility in long-term infra assets located in growth areas; and third, attractive investments opportunities ahead, focused on our core market, which is now the U.S. Also, the corporate reorganization and U.S. listing application will allow Ferrovial to tap a broader pool of capital. And last, the company is advancing on the decarbonization road map. Looking at 2023 shareholder remuneration, the Board has approved 2 scrip dividends, which, as a reference, could imply EUR 0.715 per share in total to be distributed in 2 payments. Both are expected to take place after the execution of the reverse merger. We will continue with our share buybacks, seeking approval for a program of up to a maximum of EUR 500 million of 34 million shares. If some shareholders exercised their separation rights, the amount used for that purpose would be considered as being part of the share buyback program. Thank you very much. And now we open the floor to questions.

[Operator Instructions] First question coming from -- first set of question, sorry, coming from Nicolò Pessina from Mediobanca. First question, could you provide an update on 407 ETR traffic for January and February?

We don't give, as you know, I mean, updates of traffic for previous month. But I think as commented during the presentation, some of the things that we have seen is some seasonality during the holiday periods and also the winter storms, what we see is lower mobility. But the trends have continued to be the same.

Question from Nicolo. Would it make any sense to increase tariffs in 407 ETR before the traffic has fully recovered in the 2019 level or the risk in reactivating Schedule 22 is too high?

No, we don't need to be back to the traffic of 2019 to increase the tariffs in the 407. By the way, this is a decision by the Board of the 407. But the way we are thinking about it is to calculate net revenues, considering the additional revenues increase in tariffs. At the same time, the Schedule 22 payments and is just a net present value of these net revenues that we are considering in order to decide when to increase tariffs.

Next question. Would you expect average trip length to decline in 407 ETR once traffic recovers and maybe there are more commuters that they use the other roads?

Our estimate is that this average trip length increased last months, mainly thanks to the eliminations of tolls in the 412 and 418. But this is something that probably will stabilize in the future and will be closer to the previous figures.

And how much would you expect 407 ETR interest charges to grow in 2023?

Well, we have long-term debt in 407 with fixed interest rates. There is no bond repayment in 2023. For that reason only new debt issue could be affected by current interest rates.

Next question coming from Karan Sanghavi from Santander. Has management decided what they're going to do with their upcoming hybrid call?

Well, as I mentioned I kind of -- when -- as I mentioned when I was describing the transaction and the reverse merger, we will be proposing to the AGM. If this transaction is successful, we expect to be repurchasing the hybrid bonds. So it would be economically equivalent to a hybrid call. I mean, if -- I mean, barring this transaction, I mean, we would not be exercising the call right now. We will be waiting for an opportunity down the road, maybe next year, looking for more stable markets and better economic terms. But I mean our expectation is the transaction to be successful and therefore, with the transaction to repurchase the hybrid bond.

Next set of questions coming from Elodie Rall from JPMorgan. First question on LBJ, please. Could you remind when construction works will finish?

It will finish in 2024.

I-66. What revenue and EBITDA contribution could we expect in '23?

We are not giving information until the first quarter of traffic and tariffs and revenue in the I-66. So we have to wait until the first quarter to give -- to have some information. The only thing that we are committed is the ramp-up is according to what our expectations. So we'll see how it continues. It's too early. But with the first quarter, we'll give additional information.

Next set of questions coming from Luis Prieto from Kepler Cheuvreux. First question, would you be able to shed some light on when it would be sensible to expect the reactivation of tariff growth at the 407 ETR? In this context, what would be a reasonable expectation of the amount of time you would expect to have to pay penalties?

Well, the decision, as commented previously, taking -- that will be taken by the Board of the 407. And what we are doing on it, a decision has not been taken so far. And what we are doing is following the evolution of the traffic at the beginning of the year and the first months of the year. It's a pure economic decision based on -- as commented previously, on the net present value of the net revenues. And we think that once the 407 decides to increase tariffs, there will be a faster catch up with inflation. And having said that, I think we have a long -- I'm very, very confident about the long-term value of the asset.

Could you please comment on your perception of users willingness to pay your key high complexity assets? Is it something that we should expect to last for a good number of years after they fully recovered from the pandemic impact?

As commented, we are very positive about the long-term value of the asset. And what we see is that the urban centers that they have are very active and very dynamic with population growth, employment growth, a lot of additional activity is the case for our main assets, of course, including Toronto here. And they are going to be very congested within the value of savings of time, availability are going to be there for the long-term. So we see a lot of value. And as commented in the 407, we see that we can recover this inflation very short -- after we start to increase tariffs.

Next set of questions coming from Augustin Cendre from Stifel. First question. Could you please elaborate on the traffic performance on the 407 ETR in last quarter, which fell back slightly versus A3? How has traffic developed year-to-date?

Well, as commented during the presentation, we see 3 main effects during the last quarter of the year. One -- the first one is related to whole calendar effect because we are comparing to 2019, and we are comparing the workdays in the fourth quarter of last year to 2019 that we have a lower number of working days, and it was exactly the opposite in the third quarter that we have more working days than 2019. So this is the first effect. The second one is, as I also commented previously, there is an effect -- a seasonal effect that was increased during the pandemic in which there is less mobility in periods in which there is a winter storm or when we are close to the holidays and that had affected during the last quarter of the year. And finally, also the finalization of some construction in the 401 with increase of capacity, that also affected the traffic since November. For the beginning of the year, as commented, I will -- I'm not giving any forecast or information and we'll have to wait to the first quarter to get additional information.

Next question from Stifel. Could you please elaborate on the Ferrovial Construction loss at the EBIT level? How much of the loss can be attributed to the I-66 and I-285 contracts? With the I-66 project being completed, what is the remaining risk coming from the I-285?

Okay. Well, thanks. I mean we don't provide a specific disclosure on these projects. So it's true that the risk has been, I mean, diminished substantially. But still, there is some building works and finalization to do and some discussion on potential compensation. So it's finalization of these works. We don't provide a specific detail of these specific projects. But definitely looking into 2023, the impact from these projects is substantially gone.

Last question from Stifel. Could you please provide some details on the new energy infrastructure and mobility division, which was added?

Well, as commented previously, we are increasing our order book, both in energy solutions with a different type of projects related to energy transition and also water projects. In the case of energy infrastructure as the only things that we'll have invested so far are this transmission line to transmission line in Chile and a photovoltaic plant in Spain. Our idea is not to be a utility. What we want to do is to develop infrastructure. We are developers there and rotate the assets as fast as we can. And mobility has not been any changes or additions compared to what we have done before, and we are concentrating more on things that are related to our own infrastructure.

Next set of questions coming from Graham Hunt from Jefferies. First question. How do you see Ferrovial's competitive position for bidding on the SR 400 project? Can you provide some color on what could set you apart versus your competitor bidders in Georgia?

What -- we are working to prepare the best offer for the SR 400 in Atlanta. At the same time, we have other 2 competitors that I'm sure that they will do the same. And so -- and have to compete with them, and we'll try to present the best offer that we can at the same time is profitable and make returns for the shareholders of the company. But different from us, probably we have more experience of construction in Atlanta and Georgia. And that could be a negative or a positive. We can self-perform and have we -- more knowledge of the market. But at the same time, it is a very complex market. And if you underestimate the complexity of this, maybe I mean, you can present a lower offer if you don't estimate properly in the cost of construction in Atlanta. But I think we have the capabilities to develop this project at this difficult and is a market that is not very easy to develop these type of projects. Hopefully, this is an advantage, but it could be that there are an estimated difficulties and the complexities of large construction projects in this market.

Next question from Jefferies also. Any update on the I-77 unsolicited proposal process?

Yes. We presented an unsolicited proposal for the I-77 south of our concession. This was discussed at the Charlotte, North Carolina transportation panel and they accepted to study the feasibility of this project and the environmental projects. So it will take a period of time until they decide to go ahead or not. After that, there will be a procurement process in which it will be opened for bidding and we expect to be one of the companies bidding for this project if at the end, they decide to approve it and go ahead with the procurement.

Next set of questions coming from Filipe Leite from BPI CaixaBank. First question. Regarding dividends, do you expect in 2023 higher dividends from 407 ETR than the dividends collected in 2022?

As 407 management mentioned, they are expecting a better year in 2023 compared to previous year. And that's the case. I think that the dividends will follow. But of course, we have to wait to understand the conditions and the situation of the year.

And next question, can you confirm that NTE 35 West will pay its first dividend this year after the opening of NTE3C in September?

Yes, I can confirm that after the opening of the 33, we'll pay dividends in the 35 West.

Next set of questions coming from Nabil Ahmed from Barclays. First question. We see a continuous improvement in Toronto's return to the office rates in the second half, but not real momentum behind 407 ETR traffic. Could you please explain why this is the case? Do you believe there are drivers other than return to the office, which could drive the traffic going forward?

Yes, we've seen a positive development not only in Toronto, but also in other North American cities that people are returning to the office. In the case of Toronto, they are between 1 year and 1.5 years compared to other places because of -- they started later to opening and lifting the restrictions. So I think the progress is moving in the same direction, but later than the rest. And in other cities, we've seen a similar congestion or even more activity like the case of Dallas than before the pandemic. As -- we don't see any other drivers that may affect in the short-term and I think that it is not a question of capture rates for the 407, it's more a question of mobility in general in the area and the mobility will continue, I mean, improving in the following months with people going back to the office.

On the new listing, could you please confirm the intention to be listed in Spain, Netherlands and the U.S. at the same time? Or you will withdraw one of the listings later. Given the strong North American profile, we can understand the U.S. rationale, but what about the Netherlands, any tax reason of benefits we should be aware of? What is the total cost of the transaction?

So many questions here. Well, the first thing is that we want to list ordinary shares. Ordinary shares are key to eventually end up in the U.S. indices. What the Netherlands provide is the possibility of listing ordinary shares in Spain, in the Netherlands and the U.S., and that is a great enabler. Of course, we expect liquidity to be in Spain at this point in time, initially, a long time, we should enjoy increased liquidity in the U.S. given the profile of our assets, the growth and the new assets that will be coming into the portfolio. So growth in the U.S. being such landmark assets should attract liquidity, okay? A long time, we would have to discuss liquidity in the different markets. But right now, it's just about growing awareness of a successful infrastructure story in the U.S. to U.S. investors and growing liquidity in that market. The Netherlands shouldn't have much weighting in terms of liquidity. In terms of the estimated cost of the transaction, I mean, the ballpark number should be around EUR 20 million. And there is no specific tax reason for this. I mean the Netherlands and Spain have very similar tax regimes. Tax in the Netherlands from foreign companies and from investments are tax exempt.

Next question. What is the group CapEx budget for 2023, '24 and '25?

I mean we don't provide that kind of detail or guidance except for specific projects like JFK, we have commented the type of investment expected.

Next question coming from Christiaan Wernink from Siemprelara. Does the corporate restructuring obligated repurchase of the corporate hybrid at par or 101 or can it be done at market levels?

Okay. So basically, as I mentioned before, if the transaction is successful, we expect to repurchase the hybrid bond and that we would be equivalent to call or, let's say, at par and repurchase, right? We plan to have a call for bondholders and hybrid bondholders to explain more about the transaction. But as I said, the economics would be similar to call or at par.

Next set of questions coming from Marcin Wojtal from Bank of America. First question. Regarding the reverse merger, will any of the headquarters and management functions be moved out of Spain and in the Netherlands and the U.S.? When specifically, does the company intend to apply for U.S. listing?

What we are doing is taking management decisions from the Netherlands. But as commented previously, nothing will change in Spain. And regarding the U.S. listing, it will happen after -- we are listing in the Netherlands and we expect to look to that in the second half of the year.

Next question from Marcin. Can you indicate where 407 ETR traffic was in last quarter relative to thresholds relevant for the Schedule 22 penalty calculation?

Unfortunately, well, we are not giving that information. Sorry about that.

Next set of questions coming from Stephanie D'Ath from RBC. First question. Can you comment on Budimex bribery charges and risk?

So this bribery comment that it's not a risk to Budimex and we don't know if it's bribery or what it is. The only thing that we know is that the 3 employees who belongs to FB Serwis were investigated by police. Of course, for us in the company, we do not tolerate any commission of criminal acts or of course, you know tolerance against bribery. What we have done is cooperate, of course, with the police and Budimex is also launching an internal investigation.

Next question. Can you comment on 2023 outlook for construction in particular margins?

As commented, the guidance that we are giving is that 2024, we continue to be committed with the 3.5% EBIT margins. And in that path, I think we expect to improve during 2023 compared to previous year.

Last question from Stephanie. Could you update us on JFK Terminal 1 progress?

Yes, it is going well. I think it's progressing according to the schedule. First steps are mainly about the designs and are well advanced and almost getting to be finished and approved. But the demolition of the green grass and also we have access to the Terminal 2 and the initial -- I mean, foundations are going according to the schedule. And so the progress is okay and we are happy about that. But of course, as commented, it is very early. So still pending is 2026, a lot of work to be done. But so far, we are happy about the progress.

Next set of questions coming from Jose Maria Arroyo from Banco Santander. First question. On NTE extension, what is the length in miles of the 2 new managed lanes that will be added? What disruption may be -- may the construction of the new managed lanes bring?

No. But as commented, this is the ultimate -- I understand you mean about the NTE ultimate configuration. And this is the whole length of NTE. And for one of the segments is one additional general purpose-led. And for the other segment, it's one additional managed lane what is -- will be added. In terms of the disruptions, while we are planning to avoid that there will be any traffic disruptions for these work -- construction work, we're working mainly during nighttime and it will be -- that's why it's taking a longer period of time that initially could be considered. But in general, this is bringing additional capacity to the NTE. So it's a positive thing in the future to get additional traffic with the same revenues or additional revenues, but with the same tariffs that we have right now. But with the growth that we expect in Dallas-Fort Worth and the additional population and employment, I think we'll see a lot of activity and this increasing capacity will benefit in the future.

On I-66, I-77 managed lanes, when will these 2 toll roads start paying dividends?

I-77 in 2024 and the I-66 just 12 months after with TIFIA. So it means that also it will be in 2024, of course, according to the tariff -- traffic expectations are the relatives according to the expectations that we have for this asset. But we should expect that in 2024, both assets will have dividends -- will pay dividends.

Last question from [indiscernible]. 407 ETR, why did 407 ETRs keep the quarterly dividend in the last quarter of 2022?

The 407 paid last year is CAD 150 million. It's CAD 150 million more than previous year. All of that was paid in July. So July to December was paid the full amount. So I think that's okay. As commented previously, we are positive on the 407 -- is positive about the better performance of the traffic for the asset in this year '23. So that will follow with dividends during the year, but it may be more concentrated similar to last year in the last months of 2023.

Next set of questions coming from Antonio Rodriguez from ODDO. First question. Has the cash outflow from losses already provisioned in U.S. construction being presented within the working capital in the cash flow statement ex-infrastructure that you provide?

Yes. I mean, the working capital number in the bar graph include the cash outflow from these provisions.

Next question from Antonio. What cash outflows do you expect in the U.S. Construction division for the coming years?

And basically, we have the finalization of I-66 and 285 that will rain cash, in particular, in the first half of this year. Going forward, I mean, we expect to have more balanced margins. So I wouldn't be looking to cash flow on a regular -- a cash outflow on a regular basis. The finalization of this works, yes, but in the first half of the year will be more marked.

Next set of questions coming from Nicolas Mora from Morgan Stanley. First question. Can you explain why the number of transponders in 407 ETR a proxy for user-based traffic did not grow in the last quarter of 2022? Can you give us color as to how much heavy users of 407 ETR have cut their toll road usage?

About the transponder, we can say that we have seen a higher number of big users over the last year. Having transponders or not is not a condition to use the road. And as we commented, most of the users are not -- that they are heavy users of the 407. They use it 2, 3x a month maximum.

Next question from Nicolas. Can you help us on construction? Can you help us understand how much cash you consume at U.S. legacy projects in the last quarter of 2022? This works continuing into 2023. Should we expect more cash consumption at least in the first half of 2023?

Yes, Nicolas, well, we don't provide detail on these numbers. And this links to a prior question where I mentioned that just we expect in these projects to have cash consumption in the first half of 2023. I mean beyond that, it should be pretty much over for this project.

Last question from Nicolas. NTO, you've been boosting the management team of late. Should we expect announcements on new airlines committing to New Terminal One in 2023 status of works?

Yes. About the management team and, yes, we -- of course, we are building a very strong management team in NTO. But of course, they need to start to review the project and the maintenance and the commissioning and also to make sure that we have state-of-the-art terminal and a very good project, and everything on the systems and procedures are in place. So I think that this strong team will deliver that. And of course, we are working with different airlines. And whenever we have any news, I mean, we will communicate those. And our intention is not to have 100% of the capacity committed, but these are percentage and then later, we have some airlines that will move directly to Terminal 1 when it's closed. And of course, we will prefer to negotiate probably at the end with others. So it will be more following a strategy of how we maximize the revenues from Terminal 1.

Next set of questions coming from Charles Maynadier from Kempen. First question. Understanding that you reiterate the 3.5% construction EBIT margin for 2024, but could you give us some color on the path to this recovery? Should we expect most of the improvement to come in 2024 and the marginal progression in 2023?

Well, we are -- of course, we are not disclosing any information or giving any forecast, but of course, we'll work to improve as fast as possible.

And could you give an update on the current pipeline and opportunities you see?

Well, in terms of managed lanes, what we are bidding is this year, SR 400 in Atlanta that will happen in August -- at the end of August with the decision at the end of the year. They announced also in Atlanta that they will follow with another 2 managed lanes later in the following years. We commented also previously about the I-77 South that we'll present in our solicited and they are -- was approved to study the feasibility project. We are working in many other places, but we are not disclosing the information that is confidential or in which places we are working to develop additional managed lanes. Other projects that we are bidding in the short-term, the I-10 in Louisiana that is a traffic risk project that we will bid that in a couple of months. And these are the main projects that we'll have in the U.S.

Next set of questions coming from Tobias Woerner from Stifel. First question. Other than Brookfield Infrastructure Partners, are there any other listed infrastructure entities in the U.S.?

Well, you have some rail companies that are listed, but anything that has to do with road transportation or airports, I mean, there's pretty much nothing listed over there.

Will the Spanish dual listing satisfy U.S. index investors?

Yes, we expect to remain part of the IBEX, we expect liquidity to remain basically in Spain vis-a-vis the Netherlands.

And last question from Stifel. What other U.S. releases have you reviewed, Ferguson? Are there any others you have considered?

Okay. We have looked at a variety of listings in the U.S. and also the Netherlands and the companies from Italy, France and there's a variety that we can discuss outside of this call. And this is a part that other people have followed.

Next question coming from Marcin Wojtal from Bank of America. You indicated dividend to shareholders for calendar year 2023 will be EUR 0.715 per share, which is in line with the 2022 dividend. Why is there no increase in dividends year-on-year despite the earnings recovery in the main infra assets?

Okay. We always look to different opportunities for growth. We have a substantial buyback program as well that could help to treat this amount is a stable dividend because we are in a growing -- an investment mode. But as I said, this could be tweaked with the buyback if opportunities arise.

Next question from Andy Jones from HSBC. Will the company be changing reporting currency to match U.S. listing?

No. We will remain in euros. A long time, that could change part of the success of growing in the U.S. But I mean, we are expecting to be filing IFRS accounts and listed -- I'm sorry, the reports in euros. Of course, the direct listing would be direct listing in dollars for people that buy the share in the U.S.

Next question from Nicolas Mora from Morgan Stanley. Can you please explain why costs showed up in the last quarter of 2022 at LBJ and NTE35 West in a specific chart profit shown?

On NTE 35 West, we have the revenue share with Texas DOT due to overperformance of the asset and LBJ higher NTTA fees in conjunction with improvement in traffic.

Okay. There's no further questions.

Okay. Well, thank you very much for attending this presentation and for your questions. And I look forward to the next meeting. Goodbye.