FNM S.p.A. (0EHB.L) Earnings Call Transcript & Summary

Ladies and gentlemen, good morning. This is the Chorus Call conference operator. Welcome to the presentation of the consolidated results as at the 30th of September 2025 of the FNM Group. [Operator Instructions] At this time, I'd like to give the floor to Ms. Valeria Minazzi, Head of Investor Relations. Ms. Minazzi, you have the floor.

Good afternoon, everyone, and thank you, and welcome. Thank you very much for joining this conference call on the results of the FNM Group as at the 30th of September 2025. Here, I have with me Eugenio Giavatto, CFO of the FNM Group. Mr. Giavatto will start the presentation with a brief introduction, and he will go through the results of the period, and then we shall proceed with the Q&A session. At this point, I'll leave the floor to Eugenio Giavatto.

Thank you very much, Valeria, and good afternoon to you all, and welcome to you all. And we are now presenting the results of the first 9 months of 2025. Now the results that we are going to present today is a result that shows quite a positive result in line with what we expected. Let me now get into the details of the financial highlights that you see now on the next slide. Now here, you can see the results of 2025, first 9 months versus the previous 9 months of 2024. Reported revenues EUR 503.6 million. EBITDA adjusted EUR 184.1 million up plus 6.4% versus the previous year and the net result EUR 61.5 million improving versus the previous year. The net financial position versus the 31st of December 2024 worsened, decreased, but we also are paying the seasonality, which will be stronger at the end of the year where we have the cash in of the Regione Lombardia payments, which historically lead to an improvement of the situation at the end of the year. So these are mainly the financial highlights. If we now go on to see the details of the operating highlights of the first 9 months of the year, you can see that there has been an increase in traffic on motorways, plus 2.5% and also an increase, quite a strong increase in light and heavy vehicles. And this result is due to an overall growth of mobility on motorways and volumes. Now we had an increase on A7 motorways and on the North Wing Road in Milano, significant increase of traffic. As to local passenger transportation, you can see Trenord that is the traffic managed by our joint venture controlled company, an increase of 2.2% in passengers. This trend is becoming quite well established. And we have a different distribution in times and day of the weeks. As to transportation, we are, therefore, in line with the previous year with a slight increase in volumes. Now let me now move on to the Energy business. We are proceeding with the process of installing plants. That is new plants are coming into operations. As at the 30th of September 2025, 83.7 megawatt of installed capacity. I would like to say that from September to the present day, we had another plant coming in operation in the marquee region. So the process is going on slightly more slowly than expected because the competitions for FER1 was closed at the beginning of the year, but also of FER-X, which closed in December. And therefore, we are experiencing some delay versus expectations. Now let me also point out why this has an effect. Well, if we -- if you want to get incentives grunts for FX, well, you can't start any building operations until the competition is completed. So the plants are finished, but we are waiting for the recognition of FER-X being built, but slightly delay. So as to energy production, you can see here the growth due to the greater installed capacity. Well, there's something here to be said in the first 4 months of the year, we did not have so much Sun versus the average of the previous years. So that, however, was recovered in May and July. May and June, September went quite well and the preliminary data of October actually point to an improvement. So we expect to be able to recover and reach the end of the year with our expectations in terms of production. At this point, I have completed the overall general picture of our results. And I will move on to the net result, EUR 53.5 million in the first 9 months of 2024 to EUR 61.5 million in the first 9 months of 2025. The components of the net result EBITDA as you see here higher than previous year. And then amortization and depreciation due to the change in scope of perimeters and then a financial result which is EUR 2.6 million due to lower interest payments on MISE bank loans and plus TE fair value adjustments. There is also a one-off component which is related to the external ring in Milano taxes. Well, this is due to an increase of taxation that is a negative impact. And then we reached to the result of companies consolidated at equity or equity in affiliates. This result that you see here, well, we have to say that Trenord had a worsening versus the previous year, that is minus EUR 6 million, and that was offset by the Motorways and the external ring road. As to Trenord, there is a double effect. First of all, an increase in cost, but also a one-off which is not really final, which is represented by a write-down of rolling stocks, which are no longer in use. And we believe that by the end of the year, we shall be able to complete the analysis and be able to recover this value and use it for future maintenance and repair work. As to the Pedemontana motorways in 2025, we continued our works, which started in 2024. We started construction works. And for this reason, the interest on loans for the construction are now capitalized, which gives a positive effect on the net result. And then the external ring road of Milano has been a revaluation at fair value of the associate due to the increase in capital to finance the debt. Now as to the other items, let me point out Nord Energia, which is going through a liquidation process and then the Nordcom effect, which is no longer consolidated at equity because it is now fully consolidated, as you can see on the slide. Now at the end of this general picture, I'd like to give the floor to Valeria, who will give you further details for the different segments of the company.

Now Slide #8. And here, you can see the makeup of the EBITDA. Reported EBITDA plus 6.4%, whereas pro forma EBITDA plus 5.5%. Now the main drivers in terms of growth were Motorways, Railway infrastructure, Energy and Mobility and Services, whereas Ro.S.Co showed a reduction by almost 17%. If we then focus on the pro forma data, and we can now move on to Slide #9. We can see here the details of the results of the Motorways business. The EBITDA moved from EUR 126 million to EUR 130 million in the period under review, up 3.2%. The main drivers of this growth were the increase in traffic and also something related to traffic, royalties related to fuel, to sales of fuel and food items. All of this was positive considering there was no tariff increase in the first 9 months of 2025, and this will also be impacting until the end of the year. Maintenance that were carried out in the first 9 months on Motorways, while maintenance went up by EUR 4.3 million, and this is due to the resumption of works for the Eurobank of the River Po bridge and also costs for the IT network. And then EUR 7.1 million, there is a positive component related to the noncash component reflects the movement of provisions. Then we need to take into account higher headcount, plus 16 FTE and the national renewal of the national contract. On the other hand, we need to point out the effect that we experienced a growth of costs, EUR 3.2 million related mainly to design revenues and compensation for Motorway damage caused by accidents, EUR 0.8 million, the latter item, and this led to the EBITDA of EUR 130 million for the period. Let's now move on to the Railway Infrastructure. The EBITDA moved from EUR 4.8 million to EUR 6.4 million. The main drivers here are one-off items, EUR 4 million overall related to insurance compensations for flood and hailstorm claims, which occurred in the period, EUR 2.9 million and the release of bad debt provision following a collection of unpaid receivables. And then lower maintenance, lower design costs and also lower costs related to design. On the other hand, we had lower revenues from concessions or revenues -- lower revenues from service contract, minus EUR 4 million. This is due to the supply of new trains for the period 2017 to 2032 and then a positive adjustment of a service contract for 3Q 2024, which reflected -- was reflected in this period. And then the closure of the Iseo-Brescia line. Moreover, we have to point out the negative effect related to basically higher personnel costs due to the renewal of the national contract. Let me now move on to the Energy business. Here, the EBITDA moves from EUR 11.3 million to EUR 13 million as at the 30th of September 2025. The main drivers are related to an increase in the installed capacity, new plants getting in operations as of September 2024 versus September '25, 8.1 megawatts that started operations in February 2025. As to the plant, which started operations in September 2025, that was 12 megawatts, but we still have to wait for its effect as of the end of September. The negative item here is related to the price volume mix. Prices that were contracted for 2025 started -- turned out to be a lower than those that we had in 2024 and here, a negative effect for EUR 1.1 million. And then another effect here again, a negative effect is the increase in OpEx related to the number of installed capacity. And this leads to close the 9 months with an EBITDA of EUR 12.9 million. Let me now move to Ro.S.Co. As I said before, this is the only business which shows a reduction of the EBITDA from EUR 26.6 million to EUR 22.1. As we said in previous quarters, the main effect is due on the one hand to the full consolidation of Nordcom, EUR 2.1 million. Let me remind you that Nordcom is consolidated within the company starting from the end of 2024. And then we had a negative effect due to the reduction in lease payments, mainly driven by TSR and Coradia trainsets leased to Trainline and the Trenord 94 leased to cargo. Now this effect was partly offset by greater fees cashed in because of revamping and an update on trains. Here, another negative effect here is the increase in headcount, and this is also due to the renewal of the national contract and then early executive departures and exit incentives paid to employees leaving the company. Moreover, last there is a negative effect due to higher institutional communication and sponsorship costs linked to the Milano Cortina 2026 Olympics games. Now Mobility and Services. The EBITDA went from EUR 5.4 million to EUR 12.3 million. It almost doubled. The effect is due to the additional compensation for reduced tariff -- reduced tariff revenues due to the COVID-19 emergency again and then growing revenues of traffic and a higher demand for daily travel tickets and public service contract revenue from increased mileage in Verona. Then we had higher costs for replacement services and higher operating costs due to the persistent shortage of bus drivers and the need in this case, to resort to external services to guarantee the constant quality of service. Let me now move on to the next slide, where we see the cash flow generation and CapEx. CapEx moved from EUR 66.3 million to EUR 95 million in the first 9 months of 2025. Now this higher trend is driven by Motorways. And here, the increase in CapEx is due to the development of hydrogen distribution service along the Motorways. In the Ro.S.Co. business, CapEx moved from EUR 10 million to EUR 20 million, and this is due to maintenance and update that were carried out. And we also had an increase from EUR 3.7 million to EUR 80 million services in the service of -- in the sector of Mobility and Services because of the purchase of equipments to be installed. As to the negative component here, we had a reduction of investments in the Railway Infrastructure business. In 2024, we made investments for the development of this Sacconago terminal. In the Energy business, CapEx reduced from EUR 18 million to EUR 14 million, and this is due mainly to the -- what Eugenio said before, the modulation of assets and for FX and F1, which are slightly later. As to the cash flow, the period shows an absorption of net cash of EUR 44.8 million. And this is mainly due to this -- due to cash used to the change in net working capital, minus EUR 60.5 million. All this change is due to higher trade receivables driven by progress of railway infra works and also related to rolling stock material which are financed by Regione Lombardia. And on the other hand, this is due to an increased amount due from Trenord, which is related to the compensation for funded rolling stock, which was financed, but which is no longer used or disposed of. Now as to net CapEx, well, that amounts to EUR 81.5 million, as we said. And then we have a cash absorption related to net CapEx related to the financed railway infrastructure. Now the investments made on the railway infrastructure and on the rolling stock were higher than the advanced money that we touched in this is due to the seasonality effect and to the contracts and contributions, which are contracted with Regione Lombardia. Now Page 15, you see the net financial position adjusted in this case from EUR 616.7 million as of the end of 2024 to EUR 776.6 million as of the end of September 2025. Here, the drivers were the cash absorption of EUR 44.8 million and the contributions cashed in advance for progress of work orders, EUR 49.6 million. Let me now move on to the gross debt composition on the next slide. The net financial position, as you can see, shows cash, EUR 307.3 million, which is partly offset by advances for railway infrastructure investments, EUR 171.4 million gross debt, EUR 912.5 million. This gross debt in the period under review changes in its composition versus the same period of last year. First of all, because of the reimbursement of the bridge loan that was made at the beginning of August that was paid cash. And on the other hand, the drawdown of a Finlombarda loan that was contracted at the end of July for EUR 40 million. And this leads the composition of the gross debt, which is slightly different, which is in line with what we usually have. Our bond is still outstanding or was still outstanding at the end of September. Let me now move on to the last slide where you see the maturity of debt, EUR 32 million expiring in 2025. And then we have the bond expiring at the end of October. And then you see the debt expiring in 2026 after 2026, where you can see also the Finlombarda funding. In this case, I'd like to say that all of the EUR 1 billion loan agreement signed on July 22, leading to the extension of the average maturity to 2031. And this also thanks to the concession of addendum #2 in October '22. At this point, I'd like to give the floor to Eugenio, who will give you the outlook position.

Now thank you, Valeria. What do we expect from here to the end of the year an adjusted EBITDA, which is going to be within the guidance previously released. So there's no big change here from EUR 220 million to EUR 230 million for the adjusted EBITDA. As to CapEx, we have slightly decreased the gross CapEx guidance here because as we said, part of the CapEx related to the energy business are being used with some delay, and there is also some delay in the Motorway business CapEx. And so here, we have slightly reduced the CapEx guidance for this reason. And then the adjusted net financial position is within the range that we mentioned in the past. And however, there is a likelihood that there will be an improvement in the net financial position because -- when we talk about the cash flow within the cash flow, there are 2 items which might have an effect. The first one, which is quite certain is some cash-ins for Trenord because of certain events related to rolling stock that was -- is no longer use, which generate some effect. And then the contract with Regione Lombardia, the reimbursement on financed projects, we expect quite a considerable amount of some dozen million euros, but the certainty that this will occur within the end of the year is not there at the moment. For this reason, the net financial position guidance remains the same. This is it. At this point, we can take your questions.

[Operator Instructions] The first question is by Chiara Pampurini with Intermonte.

I have a couple of questions. Now the first of all, the Energy business, you slightly answered by saying that there is a postponement of the installation of plants envisaged for this year. So I'd like to know whether the installed capacity of these plants will move to 2026. Again, energy, can you tell us what is the position in the FX tender? And what are your expectation. Now we read in the press release that in October, the addendum #2 entered in operation. Now I'd like whether if this is confirmed as an envisage that is with the recognition of the value?

Thank you, Chiara, for these questions. I'd like to ask you to speak more slowly and closer to the microphone because it was not easy to listen and hear your questions. So I think I understood your questions. But if I give you a straight answer, tell me to Energy. Now 180 megawatts at the end of the year as envisaged will not be there. They will be shifted to 2026. But we believe that the target that we have for 2025 for the end of 2025 will be there. It will be challenging, but we see this is confirmed. The participation to the FX tender is confirmed for the totality of the ready-to-build that we had. And we are confident that we will be admitted to the final part of the tender based on the proposal that we made on plants. There might be a doubt on one plant, but it is a negative effect on the effect. Now we then finally closed the period 2024, which had inside the terminal value, the #2 was closed. Now we should have the beginning of the process 2025, 2028. So we'll go in that direction as well, I believe.

The next is question is by Davide Rimini with Intesa Sanpaolo.

I have a couple of questions. One is about the guidance. This moment in this time, I guess you are confirming the guidance. But I was referring to the EBITDA guidance specifically. If I don't understand wrongly and by achieving the high range of the guidance, well, despite this points to a slowdown of the EBITDA from now to the end of the year. I wonder whether you are just being cautious, prudent or whether there are other reasons why this is going to be considering also the one-off that you mentioned and which occurred in Q2 of this year. The other question is about the regulatory part of your business. In the press release, you mentioned the exchange of communication between ARC and the public consultation process, which was renewed and you referred to a number of amendments. I'd like to know whether you can mention the changes of this consultation process versus the previous one. And another question, I know it's early perhaps. And the question is the following. Have you already thought about your dividend policy? And considering the results of the group, can you say at this moment, make some consideration about your dividend policy?