Maire S.p.A. (MAIRE) Earnings Call Transcript & Summary

Good afternoon and welcome to our call. My name is Silvia Guidi, Head of Investor Relations, and I'm joined today by our CEO, Alessandro Bernini; and our CFO, Fabio Fritelli. Given the rising importance of technology in our group, Mohammed Nafid, CEO of NextChem, is also with us and is ready to address your questions on our technology roadmap. Today we plan to cover Maire's operating and financial results for the first half of 2023. At the end of the presentation, we will be happy to take your questions. Let me now hand over to Alessandro for his introductory remarks and operational performance overview.

Thank you. Thank you, Silvia. Good afternoon, everyone and thank you for joining Maire's first half results conference call. The first half of 2023 has continued to show a robust performance with revenues, EBITDA and net income all growing double digit vis-a-vis corresponding period of last year. Our EUR 9 billion backlog was strengthened by EUR 2.4 billion of new contracts awarded in H1, the highest intake since 2018. These results start to benefit from the implementation of our industrial plan as announced last March. Our current strategic approach is based on our position as enablers of the energy transition and entails a dual business model with a new organization based on 2 business units. The first one, Sustainable Technology Solutions, is the home for solutions designed to enable innovative and sustainable processes offering technology licensing, high value-added services and proprietary equipment. The other one, Integrated Engineering & Construction Solutions, is the home for a solution to realize future proof technologically advanced plants. Thanks to our specialized know-how and world-class engineering expertise. A flexible and adaptable business model where technologies and E&C can be offered to our clients through an integrated approach, but it can also live independently. During our Capital Markets Day, we shared the underlying growth drivers of the 2 business units. Let's look into how we deployed our plan over the last few months. We want to provide you with tangible examples of the effectiveness of this business model, starting with Sustainable Technology Solutions. The increasing need for energy transition technologies, both in our reference market and in other ARPU abate industries has led to a year-to-date order intake of approximately EUR 200 million for STS. It represents a fivefold increase versus the first half of 2022. Our unique technology offering has been an essential success factor to achieve this outstanding result. In line with our plans, we keep working on the expansion of our portfolio, and our R&D department is focused on the development of innovative and increasingly sustainable solutions. Such an effort has resulted in approximately 90 additional patents so far this year, bringing the total number to over 2,100. The development of additional technologies has also been pursued through external acquisitions, with the purchases of Conser and CatC technologies, starting a trend that is expected to continue over time. The activities we are carrying out to keep expanding our technology portfolio have a positive impact on the whole business. In the first half of the year, for example, we were awarded 3 projects which involved STS as the technology provider and E&C as the executioner. We also cooperated with other partners. For example, we were among the founders of FertigHy, a consortium established by a cross value chain combination of investors to accelerate the low carbon transition of the EU agriculture industry. As we continue to develop our integrated strategic approach, we keep fostering the cross fertilization of ideas within our group, which is crucial in the innovation environment. Moving on to integrated E&C, the powerful drivers which are expected to ensure significant growth of this business continue to be strong. In the current spending cycle low carbon investments are gradually picking up, while hydrocarbons, mainly natural gas, will continue to bridge the gap to full carbon neutrality in the long run. It is exactly in this field that Maire can play a major role. Thanks to our well-established leadership in our traditional markets. This can be clearly seen in the strong order intake of EUR 2.3 billions, more than twice the same period last year. The growth in our STS business is delivering additional opportunities to be executed. For example, of the 3 integrated projects mentioned in the previous slide, 1 is related to a green ammonia plant to be built in the United States based on our proprietary technology. We will see it in more detail later on. We are also seeing an increasing activity related to the revamping and upgrading of existing plants as clients are adapting their infrastructure in order to comply with more stringent regulation and market needs. In recent months, for instance, we have been particularly supporting our clients in the upgrading of refineries to produce higher-value chemicals and products. Finally, we keep strengthening our presence in the extended E&C value chain. To this effect, we continue to be proactive in pursuing FEED contracts, a value-added service which allows us to be engaged with clients since the very early stage of the project. We have seen how our 2 business units are positioning for growth. Now we want to share with you more details about the evolution of our technology portfolio in the 4 clusters in which we operate. Nitrogen fertilizers have always been a stronghold of our group based on Stamicarbon's 60% market share in new urea licensing. Our technology offering is well established in the market and spans from low energy fertilizers to blue and green ammonia. With new additional technologies that will complement our portfolio, our main objective is to accelerate the use of green ammonia as a fuel and energy carrier. We have been active in hydrogen since the early '70s and we are now leveraging on our protected technologies in steam methane reforming, such as our unique cost-effective [indiscernible] technology to produce clean hydrogen. On the green hydrogen side, we are developing cost effective high pressures electrolysis solutions to lower the overall hydrogen cost and enable its direct storage and transportation. We are also looking at profitable ways to capture and most of all valorize CO2, transforming a cost into a possible revenue stream for our clients. We are working to expand our presence in synthetic fuels and chemicals. We are leveraging on our proprietary solutions to recycle municipal solid waste via gasification. We also have bio-based solutions for renewable fuels and chemicals, including sustainable aviation fuel, an area that we'll see a dramatic growth in the years ahead. Last but not least, our technology offering in polymers is wide and among the richest. Our sustainable portfolio includes plastic upcycling, chemical recycling and biodegradable monomers from fossil sources. This portfolio has also been strengthened. Thanks to the recent acquisition of Conser and CatC technology. In fact, the inclusion of both Conser and CatC into our group has allowed us to jump start in the technology expansion, which is at the core of our strategy. In the few months since its acquisition, we have been able to expand the Conser technology package to catalysts and extend the commercial geographical reach. At the same time, we started the activities from the scale up of the CatC technology. Our portfolio expansion was not limited to M&A activities. We further internally developed other technologies to enhance our offering, including first of all, NextCPO, a proprietary technology to produce syngas via natural gas oxidation, which can be used to lower emission in refineries, decarbonize steel manufacturing and to produce ammonia and syn fuels. Second, the LIPIDS pretreatment units, a proprietary technology for the pretreatment of contaminated olio feedstock like fats and oil to produce sustainable aviation fuel. For both these technologies, the complete offering we can provide to our client includes licensing, process design package and proprietary equipment. Overall, a bright feature which is expected to represent a key source of competitive advantage for the implementation of our strategy. Let's now look at the operational performance of the first half in more detail. The first half was characterized by a variety of new awards and initiatives, widely diversified in terms of scope of work and technologies involved, reflecting the positive market momentum. In this respect, the order intake of both business units reflects the dual exposure of our group to the traditional business and to the secular growth in energy transition. Among the new awards, a common element was the growing demand for solution able to reduce the emissions, improve energy efficiency and lower the consumption of natural resources. In this slide, we have depicted some of the main awards and initiatives achieved in the first half, including the launch of the first circular hydrogen service station in Rome to be built by Q8, where NextChem will act as the exclusive technology provider for circular hydrogen through its waste to chemical process to produce hydrogen from non-recyclable waste. Let's now have a look at our order intake. Our order intake was very strong in the first half, with EUR 2.4 billion of new awards. It was driven by a multi-billion dollar project in Middle East, making the intake the highest since 2018. The geographical breakdown reflects the leading role of the Middle East in the current environment's investment cycle, driven by an increasing demand for downstream assets, while leveraging on the opportunity to move toward higher added value products. Our trailing book to bill ratio is 1.3, representing a tangible sign of our business growth. We expect an even stronger second half, which potentially could lead to one of the highest order intake and backlog ever. Thanks to the strong order intake, our group backlog at the end of June was EUR 9 billion leading to a backlog cover of 2.4x and good visibility in the short and medium term. A 25% expected runoff in the second half of this year provides a solid support to our 2023 revenues guidance. The geographical breakdown reflects again the spread of clients' investment across the globe, with a good balance outside the Middle East. Let's have a more detailed look at each business unit level. Starting from STS, the effectiveness of our strategic approach can be clearly seen in the strong order intake achieved in the first half. The acquisitions were driven by nitrogen fertilizer and our offerings spending from technology licensing to proprietary equipment and other high-value services. At almost EUR 100 million, the order intake has more than doubled, leading to a backlog of EUR 214 million, up by EUR 54 million since the end of last year. The geographical breakdown is driven by the current nitrogen fertilizer project in Asia, while this month, July, EUR 100 million urea licensing and proprietary equipment award in Africa, be careful, not yet part of the June backlog is expected to contribute to an increased geographical diversification. We remind the shorter cycle nature of this business, reflected by a backlog cover, which is at a parity. Moving on to E&C. The first half order intake was extremely sound with a EUR 2.3 billion of new awards. At the end of June, the EUR 8.8 billion backlog and the resulting backlog cover of around 2.5x provide good visibility on the years ahead, while representing a solid backbone to our business. Let us now look at a couple of recent acquisition in more detail. At the end of June, we were awarded a $2 billion petrochemical contract in Saudi Arabia. The Emerald project relates to a major initiative set up by Aramco and TotalEnergies to develop a world scale petrochemical complex integrated with the SATORP refinery in Jubail. The project aims to convert feedstock produced directly by the refinery, such as its off-gases and naphtha, into higher value chemicals. The award consists of 2 separate packages related to 2 polyolefins units, each with a capacity of 500,000 tons per year, and the derivatives unit. The scope of work entails complete engineering services, equipment and material supply, construction activities, reconditioning and commissioning. The project will have a duration of about 4 years, and it is expected to attract additional investment in a variety of industrial sectors. This award is a further recognition of Tecnimont's world-class capabilities to execute complex projects in complex environments and confirms our leadership in downstream petrochemicals. Likewise, it consolidates Maire's strategic position in the Middle East. On the other hand, a clear example of the advantages of our integrated approach is provided by the green ammonia award, related to one of the largest green fertilizer complexes to be built in the United States. This project sees the involvement of both our business units. Stamicarbon is in fact providing the licenses and the basic engineering design, while KT is carrying out the early engineering works on a reimbursable basis. Upon completion of these early works and subject to the clients in final investment decision, the activities will enter the engineering, procurement and construction phase to be carried out by our E&C subsidiaries. This award is a further proof of our capacity to act as a 1-stop provider of proprietary technology and high value engineering solutions. Moving on to the group's commercial pipeline. We were pursuing opportunities worth over EUR 56 billion, up by over EUR 2 billion compared to March. In general, we continue to see a healthy set of attractive projects, driven by the resilience of our core business and supported by clients' willingness to invest in energy infrastructures and technologies for the transformation of natural resources. The previously mentioned step up of Conser commercial efforts, together with a significant increase in the other clusters, has led to an almost doubled STS pipeline. Our technological leadership is also evidenced by over 2,100 patents across 160 families, a portfolio that keeps improving every year. Our drive towards technology innovation gained a new recognition in June when Maire joined the Euronext Tech Leaders, an initiative dedicated to high growth and leading tech companies. In this respect, our group has been included in the subsector green production practices of the Cleantech cluster, encompassing companies developing production practices, products or services to reduce the consumption of natural resources. Let me now spend a few words on our international footprint. Our engineering workforce represented the DNA and growth engine of this group. For this reason, we are continuously strengthening this base with more than 650 new engineers hired in the first half alone and the opening of a 5th office in Mumbai in India. Further addition are expected over the next months in order to support an ever-growing backlog with a top-notch engineering workforce. We have progressed in the implementation of our ESG agenda also with several activities carried out in the 5 areas of our sustainability strategy. Among the most important initiative, we started implementing a new methodology for the calculation of scope pre-emissions, with a view of setting a reduction target before year-end. In the area of people, we have joined the Target Gender Equality, the United Nations Global Compact Accelerator program. We have also supported the Women in Science and Engineering, an initiative led by aimed at encouraging young girls from rural parts of India to pursue higher education in science, technology, engineering and mathematics. This program, led by the Indian Institute of Technology in Bombay, involved 165 girls this year. I will now hand over to Fabio for his review of the financial result. Please Fabio.

Thank you, Alessandro. Our financial results show a double-digit growth across all the main KPIs. Revenues were just shy of EUR 2 billion, up 21.7%, driven by steady project execution. G&As were EUR 41.5 million, up by EUR 5.1 million, but with a decreased incidence over revenues from 2.3% to 2.1%. Thanks to our continuous focus on achieving efficiencies. EBITDA was EUR 120.9 million, up 24.1%, mainly thanks to higher revenues. Margin was 6.2%, up 20 basis points and in line with the 2023 guidance. Net financial charges were EUR 17.4 million, up EUR 3.8 million due to the increase in interest rates on the floating rate portion of our debt, partly offset by higher financial income. Moving to the bottom line, such a positive operating performance has led to a consolidated net income of EUR 54 million, up 33%. Let's now analyze the financial results by business units. STS revenues were EUR 117.4 million, up 30.2%. Thanks to the constant growth recorded in the technological solutions and services to support the energy transition. As a reminder, the first half 2023 figures include the contribution of the recently-acquired Conser. EBITDA was EUR 25.6 million, up 48.8% as a result of higher volumes. EBITDA margin was 21.8%, 270 basis points higher. Thanks to our focused high value-added products and services. E&C revenues were EUR 1.8 billion, up 21.2%. Thanks to the backlog consistent execution. EBITDA was EUR 95.3 million, up 11.8% with a margin of 5.2% in line with last year. Moving on to the balance sheet. Let's analyze the cash flows dynamics. Our adjusted net cash position at the end of June was EUR 104.6 million, up by about EUR 11 million compared to year-end 2022. Such a positive improvement is driven by a strong operating cash generation, which more than compensated 2022 dividends for EUR 40.7 million, the share buyback program for EUR 2.2 million, as well as net CapEx of EUR 40.1 million, not including EUR 17.6 million of acquired cash. In particular, the gross CapEx of EUR 57.7 million includes EUR 48.4 million for STS mainly dedicated to expand our technology portfolio, and EUR 9.3 million for E&C, mainly related to projects on digital innovation. Let us now take a look at the working capital dynamics. The adjusted net trade working capital improved by EUR 37.2 million from negative EUR 113.8 million at year-end 2022 to negative EUR 151 million at the end of last year. This positive change is mainly driven by the project's advancements and reflects a normal dynamic of a significant backlog characterized by several multi-billion projects. I now hand over to Alessandro for his closing remarks. Alessandro?

Thank you, Fabio. And let's move to the conclusion. In conclusion, our first half financial results demonstrate a strong momentum in both technology and execution. Our EUR 9 billion backlog provides a solid platform to deliver a double-digit growth in 2023 and even beyond. Margin expansion will be supported by our recognized know-how and technological solutions and expertise and will encompass and increase the contribution from higher-value activity. Capital expenditure will be focused on technology portfolio to foster future growth. Investments are expected to be covered by the operating cash flow in line with our usual financial discipline. At the same time, our robust commercial pipeline is expected to deliver a higher level of order intake in the second half, providing a solid driver to the group's growth over the next few years. Given these solid financial results and the positive outlook for the rest of the year, we therefore reconfirm our 2023 guidance. This concludes our presentation. And now, self, Fabio and Mohammed, we are ready to answer to any question you may have. Operators, please go ahead.

[Operator Instructions] The first question comes from Kevin Roger of Kepler Cheuvreux.

The first one is related to the guidance that you have for the full year. And just to understand why you do not fine tune at least the top line guidance, because you have done almost EUR 2 billion in H1. Based on the dynamic that you have in the top line from the engineering and construction activities, this is likely that the top line will be above EUR 1 billion both in Q3 and Q4, if I'm not making any mistake. So that would mean that the EUR 3.8 billion low end of the range for the guidance is quite unlikely. So I was wondering, why are you very cautious still keeping the EUR 3.8 billion as a possibility just on the top line? The second question is related to the short-term commercial opportunities and notably the one that have been mentioned over the past weeks. So the first one is a big opportunity that you have in Abu Dhabi with Technip that have been the subject of a lot of comments recently. There has been a news last week in Upstream saying that ADNOC has given some limited notice to proceeds. So any updates on this huge opportunity for you? How do you see those things materializing? And then in terms of new energies, we have talked over the past weeks about an opportunity on carbon capture also. So any updates here for carbon capture activities would be very appreciated. And the last 1 impressive margin on the STS, is it a kind of one-off or you expect the Q2 to be sustainable for the coming quarters?

A lot of questions, very interesting and let me start from the first one. As you have correctly stated, of course it is very easy to appreciate, by the end of June we have already achieved a level of turnover close to EUR 2 billion. In the second half of the year, revenues will be predominantly generated by the project that are already on board, which are part of the backlog existing by the end of June. Of course, we expect new awards in the second half of the year, but it is reasonable to forecast that the new acquisition will generate a very limited contribution to the turnover of 2023. So in the second half, predominantly the revenues will be relating to the runoff of the backlog existing by the end of June. And since our guidance indicates EUR 3.8 billion up to EUR 4.2 billion I believe, based on the present knowledge that it was reasonable to reconfirm the guidance. Even if, of course, I can say that our expectation is to position our group at the top level of the guidance, at least for the time being. So we have decided not to modify the guidance because the range that we have originally provided already satisfied the expectation of the production that we expect to deliver this year. Then if in the second half there will be some adjustment, we have preferred to defer to the third quarter report when we release the 9 months' results, the potential adjustments to what we can deliver this year. But for the time being, we have considered appropriate to reconfirm the guidance that we have released in March. Then let me spend a few words about the commercial pipeline with a particular focus on the project that you have mentioned in Abu Dhabi. Commercial pipeline is extremely strong in both business lines. Let's now spend a few words together on the E&C business. Middle East in particular has already -- the company based over there which are giants conglomerates have already publicly announced multi-billionaire investment plan for the next few years. Saudi Arabia, Abu Dhabi, Qatar, all of them, the company -- national energy company based in those countries have already officially launched several projects. All of them are multi-billionaire projects. Why we are so optimistic? Because all of them are a little bit worried that due to the -- of megaproject in the short term there will be a [Audio Gap] available in terms of construction capacity, supply chains, as well as the availability of reliable, reputable general contractors as well as those contractors which are also able to provide technological solutions, so what is -- what has been at least what we are seeing right now. All of them are accelerated their investment decision process in order to take the final investment decision as early as possible because in order to have secured the most qualitative resources available. So in this process we -- of course we are one of the most reliable and reputable players and for this reason we are optimistic as far as the new awards, particularly in the second half of the year. This, in general terms, focusing for a while on the project in Abu Dhabi, I can disclose only very limited information because presently the project, which is Hail and Ghasha project. Hail and Ghasha is one of the most important not executed, not exploited reservoir belonging to ADNOC which is located more or less 200 miles north of Abu Dhabi, close the industrial city Ar-Ruwais. This project encompass an offshore scope of work plus the realization of artificial islands plus a very complicated onshore scope of work. The scope of work relates to the gas processing plant in the [ Mana Isah ] area plus offsite facilities and utilities, pipeline signs, control buildings and so on. So very complicated. It's a very important project. Of course, this represents one of our most significant target. But of course now since the commercial process is in a quite sensible momentum let me take the possibility not to provide any major additional information because this, let me say, could lead to detrimental consequences to the commercial process. But for sure, what I can say that is for sure our organization is working hardly on the commercial process and to the extent that the client will take the final investment decision soon we are, of course, working in order to be successful. But, of course, this will depend on the client decision. However, this one for sure useless to say that in that part of the world, in particular in the Middle East this represents our most significant target for 2023. But on top of this project there are other projects. Again in the Middle East, in the Gulf area, not only in Abu Dhabi, Saudi Arabia Aramco has already launched several projects. All of them are multi-billionaire projects. And since most of them -- both -- either in Arabia, Saudi Arabia as well as in Abu Dhabi most of them are not committed only by the local energy company. Due to the size of each individual investment the local companies very often prefer to team up with Western based international energy companies. Why this factor is important because on top of the traditional solution the sensibility about the decarbonization is also enhanced due to the presence of the west-based partners. So along with the traditional products that we are able to deliver, the tender the clients are more and more requesting additional solution in order to decarbonize their industrial process. And of course, being able to aggregate the competencies of our E&C arm, namely Tecnimont, with the technological arm of our group which is NextChem and the NextChem group subsidiaries of course we are able to satisfy all the potential needs of the client. So we are really very, very optimistic about the incoming future from a commercial standpoint for both business units. Then, as far as the carbon capture business, let me take the opportunity to pass the floor to Mohammed who is the CEO of NextChem which for sure is able to provide all the colors you may need about this issue.

So CO2 capture and storage is a domain that is very important for both our integrated E&C businesses as well as sustainable technology solutions as we see it is a topic that is very often integrated with larger scale integrated projects as Alessandro mentioned before, but specifically for sustainable technology solutions. We are seeing the team specifically in Europe gaining a lot of momentum. We are in well advanced stages in discussion with the investors that are evaluating their business cases, especially [Audio Gap] to look into how to realize carbon capture for hard to abate industries. For us, this is a very strategic topic and we expect to deliver some positive years.

I believe that there is another question that you have raised and if I well remember relates to the sustainability of the margins of STS moving forward. Very, very interesting question Kevin. But I believe that it is quite easy for me to answer because first of all, because we have already onboard a very interesting from an economical standpoint backlog for STS by the end of June. And on top of that, probably you have noted that in the first part of July we have already announced a very important project which have been awarded by a client located in the Sub-Saharan part of Africa of a giant project. We can define giant or core for STS business because it worth something close to EUR 100 million alone. So it is a very, very, very important project, a significant portion of which is due to be transferred into P&L in the short term. So for sure as far as 2023 and in particular the second half of the year, we are extremely optimistic about not only the possibility to double the results that we have already delivered in the first half of the year, but even to improve the economical performance. Then of course, the industrial cycle of STS is not a pluriannual cycle. The industrial cycle of this type of business is much shorter. So for sure, of course, moving forward, the possibility and the capability to maintain both the volumes and then the margins will rely on the new awards that we expect to get moving forward. But as I stated before, considering both the new opportunities which can be pursued by STS alone and on top the opportunities resulting from the integration with E&C, we do not see any -- we are not absolutely worried about the possibility to maintain the growth that we have communicated at the beginning of March when we have released our pluriannual strategic plan. So we are completely on track or even better. We even accelerated the process of growth that we were expecting with our 10 years plan.

The next question comes from Marco Cristofori of Intesa Sanpaolo.

Just a couple of questions. Coming back to your guidance, I remember that in the last conference call you said that book to bill should surpass 100% into 2023. And given the result of the first half, can you confirm this target? The second question is on the new contract, particularly in the Middle East but also in the rest of the world, are you seeing any price pressure from the client to lower the pricing or we are still in a very favorable moment? And lastly, if I may, I noticed that in the second quarter the rate of the raw materials on sales were down compared to last year and even with Q1. Just to understand if this is due to a one-off lease or is a sort of signal of easing inflation pressure.

Let me start from the second one, which for sure is more complicated, but at the same time is quite easy for the reason which I have disclosed before and referring to the expectation to face a shortage of reliable resources in the short run. In order to have secured these reliable resources, the clients are ready to recognize proper prices. So the consideration which, at least based on our experience and what we have presently under discussion, the major element of the discussion is not the price, is the timing, is the availability of resources, is the possibility to confirm, to cope with the client expectations in terms of execution, in terms of timing of execution of the project. And in order to cope with their request, the clients are conscious that must be ready to properly remunerate the contractors. And this is exactly what we are experiencing not only in Middle East, but also in other regions of the world. Also because the clients are enjoying cash flow from the production of the units of their industrial infrastructure which are already producing, they are enjoying cash flow from the sale of their product which they never experienced in the past. So there is, let me say, quite a positive combination which support the recognition of proper prices for the project which are expected to come on stream in the next few months. As far as the cost of materials, you have done a very detailed analysis of our P&L, I have to recognize. But you know the incidence of materials compared to the incidence of service cost depend on the phases of the various projects because for certain projects last year has prevailed the procurement campaign and now we are progressively moving into the construction. So today prevails the service rented by the subcontractors compared to the past. But I am honest, I didn't exactly the calculation, but we are talking about a very light difference. We are talking about, if I well remember, a couple of percentage point difference. So this really depends on the phases of the various project. It's not something linked to the prices -- to the price pressure of the supply chain is exclusively due to the phasing of the project under execution.

Alessandro, if I may add if we are on the expectations on prices of raw materials going forward and if we see a stabilization of prices, yes, we have seen a stabilization of prices in the first part of the year. But in these very days, if we go on the market and ask for forecasts on the prices of the commodities we use more like copper, palladium, aluminum and others, they are expected to increase again in the second part of the year. So the markets are still quite volatile. The only commodity where we see a potential decline going forward is on steel, but the market is still quite volatile. And then I think, Alessandro there was another initial question on the expectations on the book to bill, where we stated 100%, so replacement being the target. Yes, but clearly, when you have in front of you multi-billion projects, as those that Alessandro mentioned, it's hard to do the mathematics. We will see.

The next question comes from Massimo Bonisoli of Equita.

2 questions. 1, back to the question of Marco on the risk in the Middle East and the securing of resources in Middle East considering the number of projects piling up there. Just to understand how you secure resources in Middle East. We are talking about engineering capacity, contractor capacity, what else? Can you make some examples for us to understand better? And the second question on the green fertilizer project in North America. Just to understand the potential value of the project and the comparison of the traditional ammonia cost versus this green ammonia as far as breakeven is concerned.

Let me spend a few words on your initial question. You are completely right that everybody, including ourself, of course, we expect, but predominantly the client is expected to face a shortage of reliable resources. But note I am not talking about engineering capabilities because as far as engineering capabilities, at least as far as our group is concerned, I believe that you have already appreciated that we have strengthened our engineering workforce, both in Italy as well as in India by hiring additional 750 additional resources, which we expect even to increase additionally in the second half of the year. And then, thanks to this process that we have initiated not only last month, but we were forecasting this situation already in the second half of last year. So we have initiated this process to strengthen the engineering capabilities in the various discipline already effective from the second half of last year. So now I believe that already today, but more and more moving forward, we are well equipped to serve not only the existing backlog, but we are well equipped from an engineering standpoint -- and project management as well standpoint to serve also the new project that we expect to get in the second half of the year. What is more critical -- could be more critical is the construction capacity. So the availability of construction companies to be engaged in the EPC project. And since this phenomenon was already expected by our people, by our commercial guys, we have already entered into agreements with construction companies based in the area, because on top of the various difficulties, it is necessary moving forward more and more to rely upon on construction companies which are based in the country where the projects are located. So you have to refer to the local content. And considering also this constraint, we have already entered into agreements with the local reliable companies, construction companies which already cooperates with us, or have already cooperated with our group in previous occasions, and with them we have agreed already that they have to maintain available a certain portion of their organization in order to serve our request. So with the combination of the already existing engineering workforce, which is able to cover also the needs of project directors and project management and coordination to cover the coordination activities the proper way, and having already secured the availability of the reliable construction companies, we are very well equipped to face all the challenges that, in particular, Middle East will be served moving forward. So we are, of course, monitoring the situation on a daily basis, but we are already putting in place appropriate actions in order to limit the risk that you have mentioned. Then, as far as the project in the US, I believe that also for this project, Mohammed can provide you with additional color on top of what I have already provided during the presentation.