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

Hello and welcome to Maire Q1 2024 Results Conference Call. My name is George. I'll be coordinator for today's event. Please note this conference is being recorded. Ms. Silvia Guidi, Head of Investor Relations, to begin today's conference. Please go ahead.

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. Today we plan to cover Maire first quarter 2024 operating and financial results. At the end of the presentation, we will be happy to take your questions. Let me now hand over to our CEO, Alessandro Bernini, for his introductory remark and operational performance review.

Thank you, Silvia. Good afternoon, everyone, and thank you for joining Maire's first quarter results conference call. We have made a strong start to the year, building on the momentum we established in 2023. The first quarter of 2024 has continued to show robust results with revenues, EBITDA, and net income all posting an impressive growth in excess of 30% vis-a-vis the corresponding period of last year. At the same time, we consistently improved our profitability. This brilliant performance has been accompanied by an improvement in net cash. Steady operating cash generation more than compensated the share buyback and the investments. In line with our strategy, we kept working to expand our technological offering with 2 add-on acquisitions announced, both of which are expected to close in the next few weeks. At the same time, we announced our technology partnership aimed at developing and commercializing increasingly innovative solutions for the energy transition. The order intake amounted to EUR 1.3 billion, leading to a backlog of EUR 15.3 billion, entirely replacing the revenues generated during the period. Our group maintains a strong attractiveness for qualified people. Since the beginning of the year, more than 560 professionals have joined our group, spanning from Italy to India and Middle East, leading to a total head count close to 8,300. Finally, let me highlight you that today marks another milestone in Maire's new dimension, as we pay the highest dividend in our history, EUR 16.3 million, creating value for our shareholders. Let's now look at the operational performance of the first quarter. Beginning with STS, the strength of our comprehensive offering, encompassing technology licensing, innovative process design, and proprietary equipment is evident in the consistent order intake achieved in the first quarter. The EUR 77.1 million order intake is widely diversified in terms of geographies and technologies involved, reflecting that no single path to net zero exists. This result has been supported by the growing demand for solutions able to improve energy efficiency in nitrogen fertilizers to decarbonize the transportation sector, as well as to implement circular processes. Further confirmation of the ongoing momentum is represented by the increasing request for feasibility and engineering studies. The effectiveness of our commercial efforts has led to a backlog of EUR 251.6 million. Moving on to the E&Cs. The first quarter order intake of EUR 1.2 billion confirms the strong market momentum in the downstream segment. Our clients are more and more focused on extracting value for the transformation of natural resources, particularly in the gas processing and liquids-to-chemical segments. At the same time, they are increasing their efforts to decarbonize existing assets. At the end of March, the EUR 15.1 billion backlog and the resulting backlog cover of around 3.5x provide a strong visibility for the next 3 to 4 years. Let me now provide you with an update on the progress of the Hail & Gasha projects. First and foremost, let me remind you that we are following a fast-track approach aimed at completing the project in 2028. With reference to the engineering, we started the 3D model design review and the hazard and operability study, the so-called HAZOP, aimed at ensuring the highest standards of safety and efficiency of the plant. Moving on to procurement. We progressed on the placement of the purchase orders for long lead items and issued the first orders for piping materials and prefabrication. Construction activities are obviously at their initial stages as the foundation works for some key structures of the camp have been successfully completed and the soil investigation works have been initiated. In conclusion, we are progressing at steady pace in line with the schedule and with our commitment to delivering this project with the utmost quality, efficiency, and safety. Let's now take a look at a couple of recent acquisitions in more detail. In January, NextChem was awarded by Paul Wurth a technology licensing and the engineering design contract to apply its proprietary NX CPO technology to Norsk e-Fuel's first industrial-scale plant in Norway. This plant will integrate our NX CPO technology to produce SAF from green hydrogen and CO2, supporting the global effort to decarbonize the aviation sector. CPO stands for catalytic partial oxidation and is an advanced process to produce synthesis gas through a fast reaction. Syngas is leveraged in hard-to-abate sectors for different applications as the building block for chemical production as well as hydrogen. When applied to synthetic fuel production, this versatile technology is contributing to the improvement of carbon efficiency recovery yield. This project is a testament to our ability to serve clients with effective and efficient solutions to their decarbonization needs. Moving to E&Cs. In early March, Tecnimont was awarded a $1.1 billion contract by SONATRACH for a new petrochemical plant located in the industrial area of Skikda in Algeria. The project entails engineering, procurement, construction, and commissioning of a new linear alkyl benzene plant, so-called LAB, which is an intermediate in the production of household detergents, industrial cleaners, and surfactants. The new plant will boast a production capacity of 100,000 tonnes per year, further enhancing the country's industrial capabilities and contributing to Algeria's economic growth. This award underscores our unwavering commitment to execution excellence in downstream petrochemical projects. Moving on to the group's commercial pipeline, we are pursuing opportunities that are worth over EUR 57 billion, increasing compared to the end of December. The market keeps being supported by strong fundamentals in the downstream segment. The implementation of our clients' investment planned in energy and chemical infrastructures requires a strong integration between execution and technological competencies, with an increasing focus on reducing carbon footprint in each and every initiative. As a consequence, we continue to see a robust and healthy set of projects. In this scenario, our track record and integrated value proposition enable us to support our market share. At the same time, our large backlog allows to foster future growth with an increased selectivity based on sustainability and technological innovation, geographical diversification, and last but not least, of course, expected profitability. Let's now move to the technology developments. In the first months of 2024, we also made a significant progress on the expansion of our technology offering. This objective has been pursued both through acquisitions of technologies and competencies and through partnership with third parties. In February, we entered into a binding agreement to acquire 80% of HyDEP and 100% of Dragoni Group. This strategic move marks a significant milestone in our tech journey, enhancing our process design capabilities in green hydrogen. Both well recognized Italian based engineering service companies, they boast a wealth of expertise in the mechanical and electrochemical sectors, which we will leverage to develop our own innovative electrolysis technology. The second acquisition announced in the first quarter is GasConTec, a German technology and process engineering company. GasConTec's expertise is unparalleled, boasting a portfolio of over 80 distinctive patents for the production of low-carbon hydrogen, ammonia, and methanol. In particular, their Autothermal Reforming technology stands as a beacon of innovation, offering higher efficiency in blue hydrogen production while minimizing carbon emissions. With this transaction, we are strongly accelerating our technological and commercial reach with a portfolio which perfectly fits NextChem's positioning. Before closing this section, let me also remind the technological partnership announced since the start of 2024 which include: the development of the e-factory for carbon neutral chemistry with newcleo's small modular reactor; the decarbonization of cement production using inert granulate from waste-to-chemical processes; the co-development of an advanced technology to produce biomethane from dry biomass waste with ENGIE; and finally the agreement to combine our green ammonia technology with Vallourec's hydrogen storage system in Power-to-X projects. In both [indiscernible] NextChem will act as exclusive global licensor of the integrated technology packages. Additionally, we strengthened our collaboration with the Polytecnico of Milan by entering into a joint agreement to develop innovative chemical reactor solutions. Far from being mere enablers, catalysts play a crucial differentiating role in our business, driving over 90% of the chemical reactions. Overall, this intense activity underscores our unwavering commitment to driving innovation and creating a more sustainable future across different spaces. This concludes the review of the operational performance. I will now hand over to Fabio to discuss the financial results. Fabio, the floor is yours.

Thank you, Sandro. Our financial results keep showing a remarkable growth across all the main KPIs and an increase in profitability. Revenues were close to EUR 1.3 billion, up 31.9%, driven by steady project execution of our bigger backlog. G&A were EUR 21.8 million with a decrease in incidence over revenues from 2% to 1.7%, thanks to our focus on achieving efficiencies. EBITDA was EUR 82.1 million, up 41.6%, mainly thanks to higher revenues and an improved operating leverage. Margin was 6.5%, up by 40 basis points year-over-year, also thanks to an increasing contribution from technologies and high value-added services. Financial management expresses a net financial income of EUR 0.3 million. Such an improvement includes the positive contribution of the mark-to-market of certain derivatives as well as an increased yield on a higher amount of cash deposits. Moving to the bottom line, the combined effect of such positive operating and financial performances has led to a consolidated net income of EUR 46.6 million, up 77.7%, and with the margin on revenues increasing by 100 basis points to 3.7%. Let's now analyze the financial results by business unit. STS revenues were EUR 76.8 million, up 35.8%, thanks to the growing demand for technological solutions, mainly in nitrogen fertilizers, hydrogen, and circular fuels and chemicals. Additionally, revenues of the period include the contribution of the Casalborsetti carbon capture and storage project with ENI for the Ravenna CO2 hub, which is nearing completion. EBITDA was EUR 19.5 million, up 65.2%. As a result of higher revenues. EBITDA margin was 25.4%, up 500 basis points year-on-year, thanks to the product mix. E&C revenues were EUR 1.2 billion, up 31.7%, thanks to the progress of projects under execution, including the engineering and procurement activities of Hail & Gasha. EBITDA was EUR 62.6 million, up 35.5%, with a margin of 5.3%, up 20 basis points year-over-year. Moving on to the balance sheet. Let's analyze the cash flow dynamics. Our adjusted net cash position at the end of March was EUR 352 million, up by EUR 14.2 million compared to December 2023. The steady growth in net cash was driven by solid operating cash flows, which more than compensated the share buyback program of EUR 21 million as well as CapEx of EUR 8.7 million. In particular, CapEx in the period were entirely organic and were mainly dedicated to the expansion of our technology portfolio and to digital innovation. Let us now look at the working capital dynamics. Net trade working capital has remained relatively stable in the first quarter, ending negative for EUR 354.1 million, with minor movements that are consistent with the stage of each project. I now hand over to Alessandro for his closing remarks. Alessandro?

Thank you, Fabio. In conclusion, our first quarter results demonstrate a robust start to the year, providing a solid platform to deliver double-digit growth in 2024. Revenues of both business units are expected to increase progressively during the year. STS will benefit, among the others, from the contribution of the companies which will enter the NextChem group business perimeter. E&C will be supported by our large backlog, particularly by the progress of engineering and procurement activities of recently awarded contracts including Hail & Gasha. To foster business growth, we will accelerate our efforts to expand our technology offering, including through selected add-on acquisitions. In such cases, a significant portion of the purchase price is expected to be deferred and/or based on earn-outs, so as to distribute payment over time linked to performance. Notwithstanding investments and EUR 63.5 million dividends, net cash is expected to improve compared to the end of 2023, supported by strong operating cash flows. Driven by strong market fundamentals, we are targeting to replace the backlog converted into revenues all over the year with new orders of at least the same amount. Our solid commercial pipeline is expected to deliver new sizable projects, some of which we are extremely confident could be finalized in the next weeks. And this concludes our presentation. Of course, we stand ready to answer any question you may have.

[Operator Instructions] Our very first question today is coming from Kevin Roger calling from Kepler Cheuvreux.

I have 2 if I may. You just closed the remark saying that you are extremely confident to get new orders in the next few weeks. I was wondering if you can share with us a bit of color on what are the big opportunities that you are chasing for the next few weeks, few months, the region, the type of project, the magnitudes in terms of order, just trying to understand a bit the commercial dynamic that you expect for the upcoming quarters. And the second question, I'm sorry for this one. I know that you have shared already a lot of information on Hail & Gasha, but trying to again be very reassured on the execution on the project, and you gave us already a lot of color. Would you be able to share with us the weight of Hail & Gasha in the top line this quarter in the E&C business? How much is roughly linked to Hail & Gasha, please?

Extremely interesting, and I strongly hope to be able to provide you with appropriate answers. In terms of commercial opportunities which we expect, or better, we have to say we are extremely confident to be able to transform into contracts shortly. There are contracts which are in the space of the petrochemical space and gas treatment, predominantly coming from geographical regions North Africa as well as Middle East, plus projects which are in the energy transition space located in Europe. All of them we are really confident considering the level of negotiation, the status of negotiations with the clients, with the counterparts. We strongly believe that it will be possible to transform these negotiations in new contracts even before the end of this month and early next month. So just to confirm that we are talking about very hot opportunities. And these represent a portion of what we expect to transform into our backlog all over the year. Because in the second half of the year, there are also other regions which are extremely promising for our business. And I, in particular, am referring to the Caspian region, in particular Kazakhstan, which as you may know, Kazakhstan has already [ blessed ] a significant investment plan, in particular in the transformation and the gas treatment. Of course, we are there, and we believe that we have a good chance also to get new opportunities in that part of the world. And last but not least, Southeast Asia. Southeast Asia is a region whereby in particular in the petrochemical space there are a lot of investments expressed both by the local, national energy companies as well as from private sector. We are working on a couple of opportunities in order to help the potential clients to secure the financial package and as soon as it will be completed, I strongly believe that the client then will proceed with securing to our group the relevant contracts. So these are the opportunities for which we are confident to be able to secure in our backlog all over the year with the size which we have already anticipated, cumulative amount able to offset the value of the production that we expect to generate all over 2024, which, if you well remember our guidance in terms of production range between EUR 5.7 billion and EUR 6.1 billion equivalent. So just to say that extremely promising and healthy market momentum is supporting our knowledges and in particular our technological proposition, since almost all of them will be possible and the probability of award have been even enhanced because at the beginning of this commercial story there are the technologies retained by our group. So just to say that all these opportunities will see if, of course, awarded, then the combination of the STS business unit technological proposition and then, of course, the traditional competencies in terms of execution of E&C. So I believe that in terms of opportunities for what we have in front of us from the commercial pipeline, I believe that I have provided the color that you were expecting. In terms of Hail & Gasha. Hail & Gasha, as you have already anticipated, we have tried to provide a lot of information about the project, about how we have organized our group in order to serve this project, to serve the client in the best way as possible. Just to remember that we have dedicated to the execution of this project almost half of our engineering workforce and a team of top senior guys of our organization operating in the various disciplines. So just to confirm that we are extremely well equipped to perform this project in line with the schedule. And as we have detailed in our presentation, we are absolutely on track as far as the progress of the project is concerned. Of course, our engineering workforce is working hard in the detailed engineering phase. The long lead items, which was one of the critical part of the initial phase of the project, have been already -- the relevant orders have been already placed, and the counterpart, the suppliers have confirmed to be able to deliver the equipment in line with the timetable of the project. So, for sure, for the time being we are extremely happy, and I strongly believe that also the client is extremely happy, since we meet with the client representatives once a month. There is a top management meeting during which we review in detail all the progress which has been made during the month. So just to confirm that also the client keeps monitoring the progress of the project in a very, very diligent and close way. So for the time being, we are absolutely happy about this project. During 2024, of course, the activities, which will characterize this project predominantly refers to the engineering activities, which means the detailed engineering for the various disciplines, so it means civil, mechanical, and electrical instrumentation engineering activities. Whilst in particular now we are already working in the placement not only the long lead items orders but then, of course, as soon as and coherently with the progress of the engineering also the remaining orders for the remaining materials will be placed. So just to say that for the first 8 to 9 months' time, the costs will be predominantly associated to our engineering workforce, whilst in particular in the fourth quarter of 2024, the first deliveries of equipments and materials have to join the site and this will boost, of course, the level of production and the associated turnover generated by this project. All in all, this year we expect this project, which just to remember that worth $8.7 billion, we expect to generate a level of production represented more or less roughly from 14% to 17% progress of the project, which means more or less a value of production well in excess of $1.3 billion, $1.4 billion. This is the magnitude that we expect to produce from Hail & Gasha project all over 2024.

Our next question is coming from Emanuele Negri calling from Mediobanca.

We have a couple. The first one is on the STS division. Could you give us an idea of how much will be organic growth in the guidelines and how much will be from larger perimeter? And the second one is on M&A if you have an idea of the pipeline you have in front of you.

STS, I strongly hope that you have already appreciated the strong robust results delivered in the first quarter of 2024. Of course, I believe that it is useful to remember that since the industrial cycle of the STS business for sure is shorter compared to the E&C business which for sure, you know very well that for E&C business the industrial cycle is a pluriannual cycle, whilst for the STS, considering the type of services rendered to the clients and talking about licensing for the technologies provided, the process design package, and in moving forward more and more compared to the past, also the appropriate equipments and the catalysts. Of course, all of them are activities which can be served to the client in a much shorter time compared to the other business unit. So why I am providing this information? Just to say that the results achieved in 1 quarter in terms of revenues and margins associated are not linear all over the year. And since we have reconfirmed the guidance that we have provided almost a month ago, it means that all over the next quarters, you have to expect an increase in terms of revenues and margins associated quarter-by-quarter. And these will be secured primarily because most of the backlog existing today by the end of March will be transformed into revenues with the associated margin, whilst in the meantime considering the robust pipeline, commercial pipeline which we have also in the STS business, of course, we are extremely confident that also in this space new contracts will be awarded shortly. In particular from Europe. Europe is the region whereby right now, including Italy, of course, we have hot, let me define them, very hot opportunities which we expect also for the STS business to be able to transform into new contracts shortly. And this, associated with the backlog, these represent the backup for the performance which we expect in STS in 2024. Of course, we expect also that there will be a contribution not only from the projects which we have already onboard and the projects that we expect to get, but we expect also to have an additional boost, of course, to a lesser extent, from the M&A. M&A have already secured the 2 successes that we have commented in our presentation, which both of them are companies which on top to make available to our group new technological propositions, new competencies, new know-how of a very high profile. Both of them are companies which are already in the market. So they are present in the market. They have already gained an excellent reputation in the market. So, we expect that also these companies that we have recently acquired will provide with their contribution. On top of that, as you have mentioned, of course, our M&A campaign is not over. We have in our radar screen other opportunities. Predominantly we are talking about technologies and technologies incidentally are embedded into legal entities. So very often, we acquire legal entities because inside there are the technologies which represent our target for the acquisition. But all of them, also the new opportunities which we are exploring, all of them must have 1 basic element, which is the time to market. Since all those entities that we can acquire or we have already acquired must serve cash flow and economic results immediately. And this is the reason why normally we link a significant portion of the consideration that we recognize to the sellers to economical events, to market events that are due to happen shortly or in the medium terms. So time to market is one of the most critical elements that we look at in analyzing the various opportunities which we are analyzing. As far as the medium or medium- to long-term technological proposition, we prefer to serve these possibilities with our own resources. As you may know, we have enhanced, we have made stronger our research and development internal team, and our team is predominantly engaged in developing medium- to long-term solutions. Of course, all of them must be aligned with the strategic pillars that we have identified and represented to the market during our Capital Markets Day. So, just to summarize, 2 acquisitions already secured, but others are expected to come onstream all over 2024 because we have also reconfirmed the guidance that we have provided in terms of investments, investment as far as the entire 2024 is concerned, which is well in excess of EUR 140 million and up to EUR 170 million. So it means that for sure, out of this amount, a portion is associated with the internal costs, but the most significant portion is related to acquisition in the market. And out of this amount, the 2 acquisitions that we have commented, HyDEP and GasConTec, in aggregate, including also the amount that will be recognized over a certain period of time, not immediately, but we are pretty certain that we will recognize the price which is linked to the acquisition of new orders by the companies that we are acquiring. So we are confident, we are pretty sure that these entities will secure new licenses, will secure new services to the market. And as soon as this will happen, we will pay a portion of the consideration that we have agreed with the sellers. So just to say that in terms of acquisitions, for the time being, what we have already secured represent an amount close to EUR 40 million, including the stake that we have recently acquired in MyReplast Industries. So probably you remember that our subsidiary, not wholly-owned, it was a majority-owned subsidiary, owned in Bedizzole in Brescia, which is engaged in the mechanical upcycling. It was owned by our group 51%. And now considering the extremely promising results that the company is already delivering, having successfully entered into the automotive market, we have decided to invest additional money by acquiring another 34% stake, leading to a total stake owned by our group of 85%. So putting everything together, the consideration associated to this 34%, plus the other 2 we are talking about in aggregate more than EUR 40 million, out of which EUR 20 million, more or less half of this amount, will be recognized -- will be paid in 2024. And the remaining portion, the remaining 50%, will be recognized to the sellers in the years to come. It means '25, '26, and '27. So this more or less is, I believe, a quite detailed picture about what we are going to deliver in terms of M&A, as well as in terms of our expectation for the STS business growth.

Just one clarification, Sandro. On your numbers, you have indicated a range of EUR 140 million to EUR 170 million. That also includes the investments, which could also be in M&A from the E&C side?

You're right.

No, no. As indicated during the Capital Markets Day, we are targeting technology M&A clearly for the STS part of the business. We are also targeting potential companies just to be able to boost our workload capacity. So in the overall number, which was given to the market, there is also that element, clearly on top of the investments we keep on doing on our technologies, on digital solutions, on the Green Innovation District which we announced at the Capital Markets day. So the EUR 140 million to EUR 170 million is including all these investments.

Next question will be coming from Massimo Bonisoli of Equita.

I have a follow-up on the M&A in the sense that I would like to understand better the environment for acquiring companies in the technology sector. In the sense that on a market perspective, we saw share prices of technological or for environmental companies that has reduced in terms of trading multiples. Maybe there is more willingness for the owners to sell their companies in this environment. The second question is on Casalborsetti. You mentioned you are at the end of the completion of the project. So I'm curious to understand if there is, let's say, the next phase and if it is close to be awarded, or maybe you are in discussion with ENI for the next phase.

Massimo, of course, both of them are very interesting, but in particular the first one. I believe that your perception about negative environment for technological entities, I believe that is at least a partial view of the market. Because you are right, for some technological companies, the appetite and the perspective have decreased. Because for some of them they have not been able to move into those phases whereby they have demonstrated that their technological solution works, but not just works from a technological standpoint, works also from an economical standpoint. So everybody are concentrated in delivering innovative solutions, disregarding also the sustainability from an economical standpoint. It is useless to say that everything works only to the extent. There is the combination of both elements. There is an efficient technological solution, but at the same time the technological solution is also effective and efficient from an economical standpoint. All those entities which satisfy these requirements has not lost any value, have maintained the multiples which the market is ready to recognize. And more than that for sure, I believe that the market is not long ready anymore to recognize higher-value multiples, in particular when the company which retained the technology doesn't deserve profits, doesn't deserve positive results, because these, I'm afraid, represent most of the market players. For many technological players, the economical results are negative. It's not our case. When we have decided to move into this space, paying attention, of course, to the time to market of the technological solution that we were delivering and combining the long historical tradition and knowledge retained by this group, starting from the petrochemical business. Of course, we have concentrated our technological backlog in an envelope which didn't start from zero, from scratch, but started with an already existing, reputable, and significant P&L. Just to mention Stamicarbon, of course, which is one of the leading players in the industry of the nitrogen business, so green ammonia as well as fertilizer, but then, of course, more recently we have announced the development of our technological solutions, the waste to [indiscernible], means syngas, hydrogen, and circular fuels or in the hydrogen space. Hydrogen is the element which has been managed by KT since 47 years ago. So I believe that not many other entities can manage so valuable history. Of course, leveraging on what we have already onboard in terms of technology and competencies, we are conscious that we have to expand our technological proposition and instead to wait the results of our internal study, which, as I have stated before, we are doing, of course, but we would like to engage our organization in a medium- to long-term target, whilst in order to maintain this important element, which means we must be profitable with the profitability ranging between 20% and 25%. Of course, we are also paying attention to acquisitions in the market of existing entities which are already served in the market, and which have the same economical characteristic that we wanted to maintain. So just for this reason, we are moving into the market with M&A, because we are extremely confident that the market is ready to recognize for those technological groups, companies which on top of serving the market with the technology, generates profit, I believe, that the multiples and the proper value is there. Then as far as Casalborsetti, Casalborsetti I can just confirm that we are close to handover the project to the client. We are [ ultimating ] the latest phase of the project with the client satisfaction. About the next phase, of course, we are close to ENI, and we will leverage on the first phase in order then to have more chance if the client will decide to move forward. But for the time being, based on our knowledge, the second phase has not been sanctioned yet by ENI. But more probably, it is more appropriate that you raise this question to ENI directly. We are, of course, for the time being concentrated in completing the project with our satisfaction primarily and the satisfaction of the client. And this is the case.

I thought your next set of orders would come from Casalborsetti, but clearly maybe there are other projects ongoing in Italy. So thank you very much for your reply.

We'll now move to Marco Cristofori calling from Intesa Sanpaolo.

Congratulations for the results. A couple of questions if I may. First of all, a comment on what Saipem said a couple of days ago, because they said that the market is so positive that customers tend to secure the supply even before the FEED. So just to understand are you also seeing this positive trend. And second question on green hydrogen, I'm thinking to the acquisition you did recently, but however, I see that there are other companies in the industry which are suffering, losing orders, and reporting a negative operating performance. So just if you can elaborate a little bit on your strategy in green hydrogen and what are your targets. And last, very small thing. In Q1, positive mark-to-market of some derivatives generated financial gains in the quarter. Could it be the case also in the coming quarters?

Marco, with reference to your first question, it is undoubtedly absolutely certain that potential clients, or better, conglomerates in particular, regardless if they are privately owned or nationals or majors or super majors, all of them, they are worried about what is due to happen in the market shortly. It means that everybody are scared about the possibility not to have available resources from the market in terms of general contracting and technology in the short term, because of the concentration of large projects in a short period of time. In order to be sure that they will be in a position to sanction and then to sanction their projects, their investment plan, and then to have secured the capability then to realize their projects, the new market approach is exactly what you have mentioned. They want to meet with the various companies like ourselves, analyzing together the workload, and then if you commit yourself to make available a portion of your organization to the counterpart, to the client, they are willing to enter with you in a direct negotiation phase. So they are willing to abandon the traditional international bid phase, which by the way extends the timing of the commercial processes. And then at the end, there could be the situation that they will remain without any offeror, because all of them are already engaged in other projects. So in order to be sure that they will have available appropriate and qualified resources, they are approaching the various companies, I repeat, like our group, and they even want to start to negotiate before awarding the FEED. The FEED is awarded when you have already granted to the client that you are then available not only to perform the FEED, but then to move into the EPC as well. So this just to confirm that the market momentum is supporting an appetite which personally I never experienced before. So this is the situation. And it is [ same in ] (59:48) approach which is applied predominantly by the companies which are based in the Middle East, but not only the Middle East, also North Africa, as well as Southeast Asia. So this is the approach which I expect will prevail moving forward in terms of market approach. Then, as far as the green hydrogen business...

I think you were referring to HyDEP when mentioning green hydrogen. Now, clearly we are talking of a company which is, in terms of size and in terms of investments also from this group, is negligible compared to the potential of green hydrogen going forward. And you are rightly saying that green hydrogen is a long bet. It will take some time. And this is exactly why we keep on investing next to the HyDEP of this world, into the GasConTec of this world, which on the other hand is exploiting to the full extent the blue economy, so the hydrogen, which comes from low-carbon fuels and the likes. So it's all part of a strategy, which needs to marry, in a way, short-term goals with long-term objectives. And I think there was a last question on financial income. Yes, you're right, this quarter we have recorded a positive overall financial result in terms of cost versus income. Your question was whether we may have an additional quarter with a positive sign. We do tend not to make any projections on derivatives, because we are not in control of derivatives. But here we're talking of the derivative on the share price of Maire Tecnimont. So I would say, it is most likely that at least the next quarter will have a similar trend.

Our next question is coming from Mick Pickup of Barclays.

Just a very quick one from me. Just looking at your commercial pipeline, obviously it's grown a fraction since the end of the year. There's been quite a big shift between polymers, fuels, and chemicals. I'm thinking it's like EUR 8 billion out of polymers and EUR 5 billion into fuels and chemicals. Can you just talk about what's caused that? Is that projects being awarded or have things come and gone?

Basically, Mick, you are right that the time which has elapsed is very short but at the end of the day it is the result also of some choices that we have made in the meanwhile. I want to be bit more clear. For sure, Middle East is serving the market with strong opportunities in the liquid-to-chemicals space we have already anticipated the last time and now even more these programs which have to be applied by the 2 main operators in the chemical space in the Middle East are becoming a reality. So since we are there and in the meanwhile they have launched several projects in this space, we have decided to reduce our involvement in the polymer space and enhancing our participation to this project in the fuels and chemicals. What does it mean, fuels and chemicals? Of course, it means gas treatments from the most simple projects to the more complicated projects which are aiming at transforming oil into chemical products, chemicals of the various nature. So this is the result of our re-addressment of our commercial strategies in a different direction, little bit different direction, but however, leveraging on our presence in the traditional countries where we are already there and being conscious that there will be a shortage of resources for the construction. And even in the supply chain, we have preferred to play in those spaces where we believe that we are more well equipped to play even in large projects. So it is just our decision to re-address our commercial strategy in a little bit different space. I have to confirm that it is not because we have lost opportunities which were targeted before. We have decided not to pursue those opportunities in the polymer space because, as I have stated, we want to concentrate more and more in the chemical space.

Ladies and gentlemen, we have time for one more question, and that question will be coming from Roberto Ranieri of Stifel.

Yes. Congratulations for the results. Two quick questions, I would say, more general on the context. Agree, that the future is a bright future and the market is pretty stretched in terms of demand and supply of EPC services. My question is talking about the risks. There is any chance that other operators will come into this competitive arena as was in the past or this risk is very, I would say, not probable, not possible because the Chinese operators we have seen in the recent past probably are not so skilled as the operators are working in this field, in this moment. My second question is on contingent scenario geopolitics mainly. And I'm wondering if there could be some risk of procurement or supply of materials in the Middle East area affecting your projects in the Middle East area given the situation we are looking at in this moment.

Both questions are extremely interesting. Let me say that for the first one. The first one, the projects which are already in the market today and even more those that we are targeting in our commercial pipeline, all of them are characterized primarily by the technological content. And then there are for sure also challenges in terms of execution. But primarily there must be an appropriate technological proposition to the various clients. This issue limits a lot the competition. Just, of course, we are extremely respectful for all the operators in the market, regardless if they are Chinese or western based or Koreans. All of them are respectful operators, but none of them, and it is a fact, that are able to satisfy the market demand which start at the beginning from a technological proposition. Only few operators are able to satisfy end to end this type of request. And this is the reason why I strongly believe that the traditional contractors that you know very well, only some of them combines technological proposition and excellent execution capacities. These will face for sure an excessive workload. The rest, they are not the guest stars. The remaining entities, which are extremely reputable from an execution standpoint, can only cooperate, can provide their support in terms of execution. But for sure, they must be considered of a low tier, second tier operator. So for this reason, at least for the time being and what we see in the market, we are not scared about the competition. Because the competition, I repeat, which is able to serve the client end-to-end are only few operators, most of them or even all of them, based in the western part of the world, with a cost configuration, cost structure which is absolutely in line with our own. So we are not scared that someone will be more efficient from an economical standpoint because has a more competitive cost profile. So this is the story that we are facing so far, Roberto. Then as far as geopolitical risk, who knows? Of course, if I have to evaluate based on the present prevailing situation. I have to admit that apart from a limited disruption, which can affect the logistic cost, the logistics of the project because if we want to serve a project located in the Middle East with materials supplied by European suppliers, of course, with the limitation to the Suez channel, it is imperative to spend some more money and to spend some more days in moving the goods from Europe to Middle East. The same, if you want to serve a European project from far east market. But apart from this extraordinary element, which, of course, the various clients knows very well that this is an extraordinary element, unpredictable. And consequently, the additional timing requested to serve the project with the materials and the additional cost, they must be ready, of course, to cover the additional cost and to recognize an extension, if any, for the project execution. But apart from the consequences of the logistics for the materials presently, I don't see, at least for our own markets, I don't see any particular consequences today and even in the short time, then, of course, we have to use the caveat for the time being.

Thank you very much, Mr. Ranieri. Ladies and gentlemen, that will conclude today's question-and-answer session. I'd like to turn the call back over to Silvia Guidi for any additional or closing remarks. Thank you.

Thank you very much.

Thank you.

Have a good night. Thank you.

Thank you very much. Ladies and gentlemen, that will conclude today's presentation. Thanks for your attendance. You may disconnect. We wish you a very good day and goodbye.