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

Hello, and welcome to Maire conference call. My name is Laura, and I will be your coordinator for today's event. Please note, this call is being recorded. [Operator Instructions]. I will now hand you over to your host, Silvia Guidi, Head of Investor Relations, to begin today's conference. Thank you.

Good afternoon, everybody, and welcome to our first half 2025 results conference call. I apologize for the delay, which has been due to a technical issue with the telephone line. My name is Silvia Guidi, I'm the Head of Investor Relations. I'm joined today by our CEO, Alessandro Bernini; our NextChem Managing Director, Fabio Fritelli; and our Group CFO, Mariano Avanzi. Today, we plan to discuss the H1 business highlights of our business units. This will be followed by the review of our H1 financial results. At the end of the presentation, we will be happy to take your questions. Let me now hand over to Alessandro for some introductory remarks.

Thank you, Silvia. Good afternoon, everyone. 2025 so far is showing strong fundamentals. The first half has delivered remarkable growth driven by solid project execution, effective operating leverage and high value-added engineering services. As a result, revenues and EBITDA grew by over 31% and 36% year-on-year, respectively. These outstanding financial results have been accompanied by a EUR 5.6 billion order intake with significant exposure to high-growth regions. This has substantially diversified our geographic footprint and led to a EUR 15.7 billion backlog. Finally, in the first half, we deployed nearly EUR 183 million to reward our shareholders through the highest dividend in our history and to empower our employees via a dedicated share buyback program supporting the long-term incentive plans. Moving to our commercial achievements. With EUR 5.6 billion of new awards in the first half, we reached a book-to-bill of over 1.6x. Looking at our geographical footprint, more than half of our backlog is now outside the Middle East with significant operations in North Africa and Central Asia. Exposure to the United States remains limited for our E&C business, while we maintain a positive outlook for our existing technology and service business in that part of the world. Let's now look at our people. At the end of June, our total headcount reached almost 10,200 employees, growing by over 400 people in the first half and reinforcing our execution capacity. Earlier this month, we proudly obtained the DNV certification on gender equality, a testament to our unwavering commitment to sustainable, inclusive and continuously improving organizational model. Let me now give the floor to Fabio for a detailed look at NextChem's operational performance.

Thank you, Sandro, and good afternoon, everyone. The Sustainable Technology Solutions business line continues to demonstrate good momentum in the current challenging scenario, securing almost EUR 212 million of new awards during the first half and bringing STS backlog to approximately EUR 381 million. These awards span a broad spectrum of solutions from technology licensing and high value-added services to proprietary equipment, supporting projects in fertilizers, hydrogen production, low carbon fuels and waste to chemical. As you can see from the awards, our low carbon energy vectors business line is gaining strong traction aligned with the growth trajectory of the high potential markets we are exposed to. The tangible example of this traction is provided by one of the most strategic projects, the Pacifico Mexinol contract recently signed with Transition Industries. The total value will exceed EUR 213 million, and the final investment decision is expected within the next few months. This is set to become the world's largest ultra-low carbon methanol plant, and we are proud that our licensing, engineering and proprietary equipment solutions have been selected. The project leverages our NextChem AdWinMethanol Zero technology, an ATR-based solution with integrated CO2 capture, positioning us at the forefront of decarbonized methanol production. Once operational, the plant will produce 350,000 tons of green methanol and 1.8 million tons of blue methanol per year, serving multiple end markets, including plastics, paints, fuels, automotive and construction. Operations are expected to start in 2029. Let's now turn our attention to some opportunities which are expected to contribute to this year results. To further explore the potential of the e-chemistry, we are developing intellectual property and provide technical services for the conventional island and balance of plant supporting next-generation nuclear technology providers. This technology unlocks new opportunities for our e-factory platform, enabling the electrification of hydrogen and chemical production using zero-emission nuclear power. The further opportunities coming from our proprietary NX eBlue technology, an electric steam methane reforming process, enabling the production of low-carbon hydrogen using renewable energy. With integrated carbon capture and scalable design, NX eBlue sets a new benchmark for sustainable hydrogen solutions, confirming our leadership in electrified hydrogen. Now I will hand over to Sandro for a detailed look at the operational performance of the integrated E&C Solutions business unit.

Thank you, Fabio. Integrated Engineering & Construction Solutions delivered a strong operating performance. We secured EUR 5.4 billion of new awards, particularly in new regions, demonstrating the strength of our diversification strategy. This brought our E&C backlog to EUR 15.3 billion as of the end of June. These new contracts span key geographies such as Kazakhstan, Sub-Saharan Africa, Europe and Malaysia, and cover petrochemicals, gas processing, hydrogen production and energy infrastructure upgrades. Let me now walk you through the 2 major projects awarded in Kazakhstan. The new awards in Kazakhstan mark a significant step forward in our strategic expansion into Central Asia. The Silleno project worth around $3.6 billion involves the development of a large-scale polyethylene plant by a joint venture led by Tecnimont. The production of polyethylene at the Silleno plant will be fed by the natural gas processed at the Tengiz facility. The Tengiz project encompasses the development of a gas separation complex. Tecnimont will perform the engineering and procurement activities for a value of approximately $1.1 billion, while a third-party player will be in charge of construction. Strategically located near abundant gas reserves and the robust logistic network, these projects are well positioned to serve high demand markets in China and Europe. In line with our increasing presence in Central Asia, we are also establishing a new engineering and operations hub in Kazakhstan, reinforcing our long-term commitment to the region and aligning with the local in-country value strategy. Let me now give you more details on the execution of the Hail and Ghasha development projects. I am pleased to confirm that the execution is progressing well and remains on schedule. As of today, overall progress stands at approximately 33% with all major milestones being met. We have surpassed 18 million safe man hours, a testament to our strong focus on safety and disciplined project management. Engineering is advancing steadily, procurement is well underway and construction activities are ramping up across the site. Let's now look at the broader picture with a brief update on the backlog phasing. Looking at our E&C backlog by year of execution, we benefit from a strong revenue visibility despite a volatile global environment. As of the end of June, our backlog remains well balanced in terms of workload management and time horizon with approximately 20% to 22% expected to convert into revenues in the second half of 2025, another 38% to 40% in 2026, and the remaining from '27 onward. It also ensures a solid foundation for sustained growth, supported by a diversified geographical footprint and a healthy mix of early and later-stage projects. So now let's move to the financial results with our CFO, Mariano. The floor is yours.

Thank you, Sandro. Our financial results continue to show a sustained growth across all key performance indicators with increased profitability. Revenues were EUR 3.4 billion, up 31.3%, driven by steady project execution. EBITDA was EUR 232.1 million, up 36.2%, thanks to higher revenues and an improved operating leverage, resulting in an EBITDA margin of 6.7%, up 20 basis points. At the bottom line, the positive operating performance, together with an effective financial and tax management, led to a consolidated net income of EUR 132.9 million, up 37%, and a margin of 3.9%. Let's now analyze the financial results by business unit. STS delivered remarkable results with revenues of EUR 194.5 million, up 22.7%, driven by a variety of products and proprietary technologies, including low-carbon circular fuels, CO2 capture and fertilizers. EBITDA increased to EUR 48.6 million, up 25.2%. Improved profitability was driven by a product mix characterized by a higher contribution from licensing and high value-added services. Integrated E&C revenues were EUR 3.2 billion, up 31.8%, thanks to the excellent execution of projects in our backlog, starting with Hail and Ghasha as well as the ramp-up of the Algerian projects. EBITDA was EUR 183.5 million, up 39.5%, representing a margin of 5.6%, up 30 basis points. Moving on to the balance sheet. Let's analyze the cash flow dynamics. Our adjusted net cash position at the end of June reflects the healthy operating cash flow generation of about EUR 180 million, driven by the efficient management of our projects. The period was also characterized by the payment of our biggest dividend ever, EUR 119.5 million, and share buybacks for EUR 63.4 million, highlighting our commitment to shareholder value as well as our support to the employee share ownership programs. After accounting for taxes, CapEx and net financial charges, our net cash position at the end of June was EUR 300.1 million. CapEx were focused on sustaining the internal development and scale-up of proprietary technologies, accelerating digital innovation and advancing the development of our Green Innovation District in Rome, which is set to become our focal point for research and development within the group. This concludes the review of our financial results. I will now hand over to Alessandro for his closing remarks.

Thank you, Mariano. Now we have to look ahead. And looking ahead, it is certain that our group commercial pipeline remains strong at over EUR 60 billion, up compared to March, a confirmation of the resilience of the solid fundamentals supporting the downstream energy segment. We are pursuing relevant opportunities all over the world, which include fertilizers, gas treatments, gas monetization and upgrade of existing infrastructure to serve the new energy vectors need. Prudently, we have confirmed our expectations for a full year 2025 order intake to reach at least EUR 8 billion, of which 70% has already been secured. However, it is worth to highlight that in the second half of the year, several projects which have been tendered by our group will be sanctioned by the relevant clients located predominantly in the Middle East, Northern Sub-Saharan Africa and Europe. Some of them are multibillion-dollar projects. Considering the ongoing discussions and negotiations, we have encouraging evidences that the additional awards by the end of the year could exceed even significantly our before-mentioned EUR 8 billion target. Let's now turn to our revised guidance for the full year 2025. We are upgrading our revenue and EBITDA expectations, reflecting the strong project execution performance in the first half and the backlog runoff in the second half. In particular, we are increasing the revenue guidance of the E&C business unit from EUR 5.9 billion to EUR 6.1 billion to a new range between EUR 6.3 billion and EUR 6.5 billion. Similarly, we are raising the EBITDA guidance from EUR 310 million to EUR 330 million to a new range between EUR 350 million and EUR 365 million. This implies a 20 basis points margin improvement compared to the previous guidance. We are confirming our revenue and EBITDA guidance for the STS business unit. We expect an acceleration in the second half, driven by the recent awards as well as by project expected to be acquired in the coming months. In the current uncertain environment, NextChem will also benefit from our integrated strategy, leveraging on our E&C leadership. As a result, we are raising the group revenue guidance from the prior range of EUR 6.4 billion to EUR 6.6 billion to a new range between EUR 6.8 billion and EUR 7 billion. We are also raising the EBITDA guidance to a new range between EUR 460 million and EUR 490 million, increasing the EBITDA margin guidance from the previous range between 6.6% and 6.9% to a new range between 6.8% and 7%. We also confirm our CapEx and adjusted net cash position guidance. Overall, we remain focused on the execution, value creation and to deliver on our strategic road map. And this concludes our presentation. Fabio, Mariano and I are now ready to answer any questions you might have. Operator, please go ahead.

[Operator Instructions] We'll now take our first question from Massimo Bonisoli of Equita.

I have 2 questions. The first question on the pipeline, following the strong order intake in Central Asia during the first half, could you provide more color on the remaining commercial pipeline in the region? Are there any sizable opportunities at an advanced stage that could materialize in the near term? The second question is on the guidance range, which appears quite wide. Could you provide more color on the assumption underpinning the low and the high end of the range? To what extent does the variation depend on project execution dynamics versus potential upside from growth in NextChem?

Thank you, Massimo. Let me go through your first question. The appropriate direct answer is yes. Of course, we have several projects located in Central Asia in our commercial pipeline. But I do not expect that something else will materialize before the end of the year in that part of the world. Since almost all of them are in the initial stage, most likely, there will be some feed which will come on stream in the last part of the year, leading then in 2026 to the EPC projects. And these opportunities come once again from Kazakhstan, but also the neighboring countries like Turkmenistan, Uzbekistan, all of them countries -- all of them concentrated in investing in the downstream, in particular, in the gas monetization infrastructure. So we are a little bit optimistic for the future. But as I was saying before, I do not expect to gather additional projects before the end of the year in that part of the world since, as I have already confirmed during the presentation that most of the opportunities are expected from Middle East, North Africa, Sub-Saharan Africa as well as from Europe. Then I don't know if I have answered to your question. But moving to the second one, you are talking by a wide range. Well, EUR 200 million, in particular, talking about the revenues. To me, it is not a huge amount of money considering the magnitude that we are promising to deliver all over 2025. I mean EUR 6.8 billion to EUR 7 billion in terms of revenues. Of course, we are engaged in -- these revenues will come predominantly from EPC projects. All of them are part of our backlog. So we do not need to book any additional project before the end of the year to deliver this level of turnover. But of course, an EPC project could have some uncertainty. So with the traditional prudence that we apply in delivering our estimates for the future, we have considered -- to me it is a very limited, very small range, but if there will be any influence on the result, this could come only from something which is presently not predictable. But based -- and can confirm that based on the schedule of each individual project under execution, I can say that most likely, our revenues will achieve the top line of the range that we have communicated.

Let me complete the question because you also mentioned orders for the STS side of the business for NextChem. Let me say that the results achieved to date are in line with what we were planning at budget level last year, where we see a number of awards coming through in the second half of the year, which will allow us to meet the targets we have communicated to the market. So if your question was related to that part of the business, we confirm as it has already been done, the guidance given for NextChem business line.

And we'll now take our next question from Kevin Roger of Kepler.

I have 2, if I may. The first one is a kind of follow-up on NextChem, just to try to understand the EBITDA margin guidance, because you argue that basically H2 top line will increase quite strongly. H1 EBITDA margin is already at 25%, the top end of the range. So what are the elements in a way that should mean higher revenue leads to lower EBITDA margin for STS? Don't you have any kind of operating leverage, things like that in the division, just to understand the reason why you did not also fine-tune the EBITDA margin for the STS considering the H1 performance? And the second one is on the comments that you just said, on the order intake side, saying that you will be at least at EUR 8 billion, and that considering the pipeline, you could be significantly above the EUR 8 billion. If you had to take a guess and it not being a guidance, would you say that it's likely that you will be above EUR 10 billion order intake this year finally?

Let me start with the first question because it's dedicated to NextChem. In the second half of the year, we are expecting a mix of services, which should deliver higher revenues for a relatively higher percentage of services and equipment, which will increase the overall revenue deployment. But it is also fair to say that in the second half, we will also have a mix of licenses, which were planned in our preview of the year. And the overall result is an EBITDA margin which is more or less in line with what we have deployed in the first half of the year.

Yes, Kevin, as far as the E&C business unit, I have to say that in the second half of the year, we expect to conclude to achieve the final completion for certain projects which comes from the past. So then will prevail project recently awarded with a higher marginality. And then on top of that, we will be able -- it is important to me to emphasize also another element. We will be able to manage a higher volume for revenues with the same organization, with the same supporting organization. So the incidence of our overhead compared to revenues will be much lower compared to the past, resulting in a higher profitability. So predominantly, the higher profitability is the combination of higher marginality for the projects, which will generate revenues in the second half of the year associated with a lower incidence of the structural cost, as I mentioned before. Then your second question is a little bit tricky. You are not a friend, because if you should be a friend, you shouldn't raise this question. But however, trying to provide an answer, there are at least 3 projects presently under discussions. Each one exceeds $1 billion in terms of value. So we have already experienced that the client before taking the final investment decision could take some additional time. But based on the present knowledge and the level of negotiations, we are confident that the new awards from now until the end of the year could be in the range of EUR 3.5 billion to EUR 4 billion. But please, it's not -- it is my personal expectation considering that I am directly involved in the negotiation with the client. But of course, competition is tough, and there are several elements which could play adversely. But for the time being, I am a little bit optimistic to be able to deliver this amount of new awards.