Maire S.p.A. ($MAIRE)

Hello, and welcome to Maire's Q1 2026 Results Conference Call. Please note, this conference 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. Please go ahead.

Good afternoon, everybody, and thank you for joining Maire's First Quarter 2026 Financial Results Conference Call. My name is Silvia Guidi, and I'm the Head of Investor Relations. Today, I'm joined by Alessandro Bernini, CEO; Mariano Avanzi, CFO; and Fabio Fritelli, Nextchem Managing Director. They will walk you through the operating highlights of our business units, followed by an overview of our 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, and good afternoon, everyone. We had a solid start of the year with operations performing well across all geographies, confirming the strength and the resilience of our business model. Activity in the Middle East continued in line with the safety protocols agreed with our clients and the local authorities. Operational complexities were managed effectively and as a result, project execution continued without major disruptions. From a financial standpoint, this translated into first quarter revenues of EUR 1.8 billion and a 7.1% EBITDA margin, supported by the growing high-value contribution from Nextchem. Furthermore, last week, a record of EUR 187.6 million dividend was paid to our shareholders. On the operational side, the strong order intake further reinforced by cloud, extending visibility towards 2030 and 2031. Indeed, we managed to generate EUR 4.8 billion in new awards in the first 3 months, including two multi-billion projects. This represents a book-to-bill of 2.6 in the quarter and over half of our stated target of EUR 9 billion in new awards expected in 2026. Such a strong commercial performance has led to an increase in our backlog to EUR 15.7 billion at the end of March, representing a backlog cover of over 2 years of full speed production. Before we move into the details of the quarter, let me provide you with an update on our operation in the Middle East for the E&C business unit. At the end of March, we have around 2,400 engineers and technicians deployed in the Gulf region. Our EPC projects in the area are largely in advanced construction or in the commissioning phases. During the first quarter, construction activities advanced, thanks to the availability of key materials and equipment already delivered to site. In particular in the UAE project, the Hail and Ghasha gas development project, reached an overall completion of around while Borouge 4 is expected to start production in this quarter. Project in Saudi and Qatar are also advancing through their respective construction and completion phases. Looking ahead, we expect activities to continue under the established security protocols, supported by a constant engagement with our clients to agree alternative solutions across logistics and procurement as well as the appropriate recognition of price escalation where relevant. Let me now leave the floor to Fabio for a detailed look at the STS operational performance.

Thank you, Alessandro, and good afternoon, everyone. Nextchem continues to demonstrate resilience amid the complex business environment, supported by our broad portfolio of technologies. As such, our backlog reached EUR 313.5 million at the end of March. The order portfolio shows a diversified exposure to multiple value chains in fertilizers, specialty chemicals and materials, serving clients in around 4 key countries. This will be further strengthened by the contribution of Ballestra's portfolio of around EUR 270 million at the end of March, as the closing of this acquisition is expected in the coming weeks. In the meantime, we have already started working closely with the Ballestra team on a number of commercial initiatives, particularly in the Fertilizers and Metals and Mining segments. This collaboration is also expected to unlock cross-selling opportunities across our technology portfolio and may also evolve into the delivery of integrated solutions. Let me now focus on the biggest project ever awarded to Nextchem, the EUR 485 million contract in West Africa. The scope includes licensing, process design packages and critical proprietary equipment for 3 large-scale nitrogen fertilizer complexes. The project, which is subject to a final investment decision, brings together Nextchem's proprietary hydrogen, ammonia, urea and methanol technologies, representing the first integrated application of Stamicarbon, GASCONTEC, and KT Tech solutions. This is strong proof of the complementarity of our offering and cross-selling capabilities. Engineering activities have already started, highlighting both the strategic importance and the strong execution momentum of this landmark award. I will now hand it back to Alessandro for the operational performance of the Integrated E&C Solutions business.

Thank you, Fabio. So, the demand for our E&C services remained very solid. In a world where energy security and the widespread use of gas-based chemical products are increasingly critical. We secured EUR 4.7 billion of new orders, bringing the E&C backlog to EUR 15.4 billion at the end of March. This is driven by our clients' willingness to continue sanctioning new projects in spite of the current temporary business and financial volatility. The projects awarded reflect our bread and butter activities across gas processing, petrochemicals and refinery upgrades worldwide with completion dates mainly expected between 2030 and 2031, further strengthening revenue visibility. Now let me give you additional details on an important achievement that we reached recently through our subsidiary, KT Tech Technologies, based in Rome. We are pleased to have successfully completed the upgrade of the Rijeka refinery in Croatia. This was a EUR 550 million project, including the additional compensation agreed upon with the client while moving towards the project was executed in a challenging having progressed through the pandemic and the geopolitical instability, further confirming KT's proven capabilities. We are particularly proud to have supported our client in improving the operational efficiency and performance of its assets while also increasing Croatia's energy security and creating value for the country's economy through the involvement of local companies and workforce. So now it's time to hand over to Mariano for the financial review.

Our first quarter group income statement continues to reflect steady growth in revenues and profitability. Revenues reached EUR 1.8 billion, up 7.6% year-on-year, driven by solid project execution. EBITDA was EUR 131.2 million, up 15.7%, supported by higher revenues and improved operating leverage. This resulted in an EBITDA margin of 7.1%, up 50 basis points, also thanks to the contribution from Nextchem's higher value-added services.  At the bottom line, strong operating performance combined with effective financial and tax management delivered a consolidated net income of EUR 76.7 million, up 19.9% with a margin of 4.2%. Group net income was EUR 67.4 million after EUR 9.4 million of results attributable to minority shareholders, mainly related to Nextchem and projects in a joint venture.  Let's now analyze our financial results by business unit. STS delivered excellent growth with revenues of EUR 140.6 million, up 46.2%, an increase mainly driven by low-carbon chemicals and fertilizers. EBITDA rose to EUR 32.3 million, up 40.8% with a margin of 23%, reflecting a higher contribution of proprietary equipment in the product mix during the period.  As a reminder, Nextchem's first-quarter results do not yet benefit from the consolidation of Ballestra. E&C revenues were EUR 1.7 billion, up 5.3%, reflecting steady project execution. Growth was driven by key geographies, including the Gulf, Nigeria, and Kazakhstan. EBITDA was EUR 98.9 million, up 9.3% with a margin of 5.8%, up 20 basis points.  Let's now analyze the cash flow dynamics of the period. Our adjusted net cash position at the end of March was EUR 396 million, in line with the 2025 year-end figure. This was driven by a healthy operating cash flow generation of EUR 170 million, which more than offset the share buyback program for EUR 81 million and CapEx of EUR 23 million. Capital expenditure was mainly focused on the internal development and scale-up of proprietary technologies and on digital innovation initiatives.  CapEx also includes the consideration paid for the acquisition of the remaining 16.5% interest in Concept, as well as an earnout related to the acquisition of GASCONTEC. This concludes our financial review. I will hand over to Alessandro for his closing remarks.

Thank you, Mariano. As we look forward, our commercial pipeline increased to EUR 61 billion at the end of March without considering anything related to the activities to rebuild damaged infrastructures in the Gulf region. In a global context marked by geopolitical tension, energy security and access to critical commodities such as fuels, fertilizers, and advanced materials remain key drivers in accelerating investment decisions.  This is creating significant opportunities for both our technology and E&C services. We are seeing a pickup in specific geographies, including South America, which we continue to approach with selectivity and the risk-prudent mindset, as clients seek to monetize oil and gas resources and export commodities globally. Additional momentum is coming from gas monetization in Central Asia, LNG developments in the Americas, and refinery upgrades worldwide.  As such, we remain confident in our ambition to secure around EUR 9 billion of orders this year, of which over 50% have already been booked. Going forward, the next awards are expected to start materializing in the next few weeks. Later in the year, we are also expecting new awards, including integrated projects, which will enable us to further broaden our geographical reach, as stated during our Capital Markets Day. In conclusion, our first quarter performance has been solid, confirming the resilience of our business even in a challenging and volatile geopolitical environment.  Looking ahead, considering the limited, very limited effects on projects in execution in the Middle East, the group's potential involvement in the rebuilding of damaged infrastructures, as well as the increasing contribution from existing projects located in other geographies, the expected achievement of the previously set target for the E&C business unit is confirmed.  The STS business unit's first-quarter 2026 results do not yet incorporate the consolidation of Ballestra Group, whose acquisition is expected to be completed in the second quarter of 2026. Such acquisition, together with an expected pickup in the business fundamentals and market environment, will lead to higher revenues and margins, particularly in the second half of the year.  We are on track with the expansion of our technology portfolio. In addition to Ballestra, we continue to selectively pursue additional M&A opportunities, particularly in the processing of metals and critical raw materials in line with our long-term strategic priorities. On this basis, we confirm our 2026 group guidance. So this concludes our presentation, and we are now ready to take your questions.

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

I have, in a way, three questions, if I can. The first one, if you can bring us a bit of color on STS and the commercial dynamic in order intake this quarter at EUR 16 million. So any color on, in a way, this performance and the expectation for the next quarter, please? The second one is still related to STS Nextchem. If you can make can you comment on the acquisition of Ballestra and the expected timing for the closure of the deal and if there is any delay or whatever? And the last one is on the E&C business. You mentioned in the press release and in the remarks that if the situation remains closed around the Strait of Hormuz in the coming months, you can find new routes, new alternatives, etc. Any comment that you can share with us in what it could mean for the execution work on the ground? Does it mean that if you have to find new routes, the execution work could be slowed down because the process will be longer in terms of supply, procurement, et cetera? Just to understand a bit the potential outcome.

Let me Sandro, let me take the first two questions, which are on STS, and then I'll hand over to you for the third one. So you're right. In a way, you're right that the first quarter of 2026 has been below expectations in terms of order intake for STS. I may also say that this was partly foreseen as it is very much linked to a delay to this quarter on the award of two opportunities we have in an area which has been impacted by the current situation. So there has been a slight delay in the award of these projects where the technology has already been selected. So we are expecting to recover what is left there shortly. As far as the timing of Ballestra, you know that the transaction is only formally linked to the receipt of the clearance from the antitrust authority on four of the countries in which the company is operating in. And today, we have received three of the four clearances. We are waiting for the fourth. So, we expect it to be concluded in a matter of days, if not weeks, the longest.

Talking about the projects, the E&C projects that we have in the in the Gulf region, having a reference to your question about how we can feed the properly the construction in the months to come. We have already stated during our presentation Kevin. You have just to reconfirm what we already mentioned. It means that in particular all the last couple of quarter or 2025, we have almost concluded the procurement campaign for the project which are located in the Gulf region. All of them are in advanced stage of completion. All of them are already facing the construction phase and in order to feed properly the construct we have decided regardless the present geopolitical situation to concentrate, to accumulate care of the various construction sites significant dimension of materials, in particular those which cannot be bought in the country. By the way, we are talking about countries, Middle East, whereby the supply chain is able to satisfy most of the procurement which is needed to serve the various project. With the exception of the most critical equipments. Some critical equipments has been already brough for Europe and the equipments have been already delivered on site. So at least for the next three, four months' time we don't see any particular problem to serve properly the values more and more results. Of course in the meantime in order to be prepared we have already identified alternative of core results of delivery starting from Egypt then moving on from to Suez Chanel, Muscat, Oman, Fujairah or Saudi. So, all of them are alterative corridors which are available for the delivery of the receivable material which people will be give us necessary to have available on site not earlier than July, August. So we have a significant time available to wait for a more stabilized situation without facing any type of disruption in the meanwhile.

The next question comes from the line of Jamie Franklin of Jefferies.

Firstly, just on the E&C business. I wanted to clarify on the comment that you made regarding some awards starting to materialize in the next few weeks. And you mentioned that later in the year, you're expecting new awards, including integrated projects. CMD, you talked about the bulk of the awards coming not prior to the summer months. So yes, I just wanted to clarify on that point, please. And then secondly, for Nextchem, could you please give us your latest thoughts on the potential FID timing for some of these larger awards? And I'm thinking particularly about this Pacifico National Award that was announced last July, there appears to have been some positive movement on that project. I believe it is now in the preconstruction phase. So can you clarify whether we can consider that project as having FID-ed or approaching FID and whether it will be added to the Nextchem backlog anytime soon?

Jamie, as you have correctly stated during the Capital Market Day, we have declared that we didn't expect to be awarded additional projects on top of the 4.7 already awarded at the time of Capital Market Day before summer. Useless to say that the present geopolitical situation has pushed the various clients to accelerate the final investment decision geography where we were trying to achieve new orders. All of them the various clients or potential clients, all of them, they have accelerated the process to take the final investment decision. One of them have surprised ourselves because we were expecting not to face the potential awards before June, early July. Now they have communicated their intention to provide the letter of award within the next few weeks. So this is, of course, a very positive surprise also for ourselves, surprise in terms of award, but of course, we are well prepared if this success will be confirmed, we are prepared to start immediately with the relevant operational activities. We are not unprepared for the execution. Then the opportunities that we are working on from a commercial standpoint I reconfirm that most likely nothing is due to happen before summer or during summer considering that some of them are located in regions where they are not used to spend a lot of time in summer for their vacation. So for sure, it is not excluded that something could be awarded even during the month of August. And this reflects the investment appetite all over the world including spending from gas treatment, so gas monetization, petrochemical as well, but more than that fertilizer. Fertilizer for sure, thanks to the significant growth in the price of the commodity have suggested the various potential investors to accelerate their decision investment process. And for this reason, we are talking about integrated projects because in case of fertilizers, we are able to serve the client not only with solution capabilities but also our as well thanks to the proprietary technology retained by Nextchem, we are able to provide the client with the technology solution for the ammonia for the urea granulation and melt. And just in case the clients want to transform or proceed with the methanol production, of course, we are able to serve the client also with this proprietary solution. So this in a few words is the situation that we have in front of us.

As far as the question on the landmark projects, which have announced Mexico ago and the West African project a few weeks ago, some elements for your consideration. What is happening is that clearly, they are aim for early engineering services in certain cases for PDP, but then the big amounts will only come with the payment of the license fees and the PDP, I'm sorry, and the proprietary equipment, which are clearly linked to the final investment decision. Going to Mexico, you're rightly saying that there has been a positive move just a few days ago in Mexico City, where the sponsor gathered all the various stakeholders. So all the companies were going to be involved there and there was the entire financial community that hopefully will finalize the debt for this project. So we're talking about the IFC, a number of ECAs and that was included a number of players, European and Asian, which have been awarded the various EPC contracts. Needless to remind that the EUR 3 billion plus project requires some time for the finalization of the financing package. The sponsor has indicated a time line of the third quarter of this year, the end of this year for the closing of the financing package. As far as the just a comment on what Sandro was saying on fertilizers. That's definitely the most remarkable indication we have received from the market in recent weeks also as Nextchem, there's a lot of interest on ammonia. There are a number of initiatives that were already in the mind of investors, but that are taking momentum because of the current situation and also because ammonia, especially in Asia, is being used as an alternative fuel to coal. So there's a double use, which is boosting demand. And we see a number of initiatives in that part of the world as much as in Latin America. So just to confirm what Sandro was mentioning on the execution side.

The next question comes from Massimo Bonisoli from Equita SIM.

Two questions. One on the Middle East. What kind of cost inflation are you currently seeing on projects in the region? And to what extent are clients willing to absorb higher project costs or potential delays? Do you see also potential opportunities emerging around the repair and upgrading of energy infrastructure? And how material could these opportunities be in terms of size and timing? The second question on Nextchem. The 46% growth reported in Q1 is already well above the pace implied by your 2026 guidance, even before consolidating Ballestra. Assuming Ballestra will be included going forward, the implied growth in the guidance appears relatively conservative to me. So could you help us understanding what Nextchem growth would have been including Balestra in Q1 and provide some color of the drivers and the phasing of growth for the rest of 2026? And also, any update on the M&A pipeline for Nextchem considering the sizable CapEx budget for 2026 would be helpful.

Massimo, if you don't mind, I would like to start talking about a little bit your first question on the E&C, in particular with respect to the inflation cost and also the other question that you have mentioned. So inflation. I hope that you have understood that most of the procurement campaign which have to serve the project which are presently under execution in the area have been already satisfied, have been already completed. Another element that you have to take in consideration that the most significant portion of the procurement campaign which are due to serve the project in the area comes from China. China has a very stable cost profile, and of course, we have decided an agreement with the client because you know very well that we can approach certain suppliers to the extent they are part of the vendor list of the client. So having granted the access to the Chinese market being a very competitive market and stable as well from cost-wise and sometimes, please do not forget that some projects have been financed by the Chinese system. So we are obliged to buy in China. For sure, from that part of the world, we are not experiencing so far nor we are experiencing for the next expected orders any major deviation compared to the present situation in terms of cost. So another important portion of the procurement, as I was saying before, since we have the local content constraints which very often are, in that part of the world, they are not moving significant. For sure, there is a significant effect which comes from the higher cost of the fuel, but apart from that, we are not experiencing any major face because we will be obliged to alternative corridors longer, this will require additional time and of course, imply additional cost. But the reason behind is not a voluntary decision if this will be the case, we are obliged because of the extraordinary reason behind such a decision, which is the conflict. So it must be considered an extraordinary event. And because of this reason, we are entitled to have covered by the client the additional cost, if the cost belongs to us , the duty to fully demonstrate and to document properly the extra cost that we have are going to be incurred, but apart from that, I do not expect, as already proven by the previous experience with the pandemic and the Russian-Ukraine conflict, that to the extent you demonstrate properly the extra cost compared with the normal situation that you have incurred, normally the client recognizes the additional cost. I don't know if I have talked a little bit about the repair cost, repair activities. Frankly speaking, I am not in position to provide a flavor about the size which could be, which could be effect our business. For sure, we will be part of certain repair activities which originally had been designed and is not by our group. So presently, we are organizing ourselves in association also with other contractors, and whatever is needed to come out from this type of activity, this will be worked out over the next few weeks' time. Because, of course, all the clients which have suffered damages for the present war activities, they are eager to have repaired all their infrastructure because we are talking infrastructure which were already in operation. They were already originating cash flow, so for sure the priority for them is to re-establish operations for those infrastructures and to reopen the cash flow from those industrial infrastructures. So for sure, I do not expect that the clients interested by these unfortunate events will take a long time. I expect they will take a fast track decision process, and of course, we are studying the situation and in order to be prepared to immediately mobilize on the potential projects which we will be awarded . But, of course, presently, I cannot be very clear about the size and the consequences of our economic standpoint in our operation, but I think that we have just an improvement.

And then on the 2 questions for STS, Massimo. On the first one regarding the first quarter of this year and the projections, I would say the quarter is in line with what are the projections that been communicated to the market and the guidance we gave for Nextchem the contribution of Ballestra will kick in from this quarter, and it will be clearly adding to these numbers. But as you know, Ballestra has a slightly different kit of services if compared to Nextchem. They also include a portion of services in the E&P type of business, which in Maire is taken care of by the E&C side of the business. Now these type of services have a longer life cycle than the usual services we do NextChem, which means that the EUR 270 million of existing backlog in Ballestra, which will have a longer time than the usual timing of our services. So at this point in time, we are confirming the trajectory of the EUR 700 million in terms of total revenues. Let me also give you some elements for your consideration. Clearly, we are already working with Ballestra in order to understand cross-selling opportunities and potential upside going forward, but it's definitely too early at this point in time not having reached the closing to understand when these benefits will actually materialize. Sorry, yes, the second question on M&A, we confirm what we have clearly anticipated in the Capital Markets Day. We have, we'll keep on looking at the market opportunities. At this point in time, we have two concrete opportunities we are looking at. One is in the recovery, the circularity of critical minerals. And the other one is in technologies for the treatment of metals. And as you know, is, in our opinion, one of those sectors that will have interesting chances and opportunities for business going forward. So we confirm those two targets we are currently working on in terms of M&A.

The next question comes from Marco Cristofori of Intesa.

Congratulations for the results. Two short questions, please. The first one is on the cash flow, which was particularly strong this quarter with over EUR 100 million generation. Just to understand if there was any particular element which impacted maybe advanced payments from clients. And my second question is what is happening below the operating line in the sense that you reported lower financial charges, at least compared with my expectation and also lower tax rate. So if you can elaborate on what can be your forecast for the full year?

Marco, let me start talking a little bit about the cash flow, and then I leave the floor to Mariano as far as net financial charges are concerned. Let me say, let me clarify, first of all, that in the quarter, we didn't monetize any advanced payment from the clients behind the new awards that we have announced. So the EUR 4.7 billion equivalent which have been awarded to the E&C business unit have not yet generated have not yet expressed any advanced payment, which we expect to monetize in the second quarter, so in the present quarter. So as you have mentioned, despite the important cash out that we have financed the acquisition of treasury shares for an amount in excess of EUR 80 million. This has been counted as more than satisfied by the operating cash flow, which have been secured by the projects which are presently ongoing. So nothing extraordinary from a cash standpoint, just the monetization of the normal milestones associated with the progress of the various projects.

Considering the financial proceeds, depends mainly on our financial discipline on all the projects and so on good financial position, cash position that means that the proceeds from bank accounts were better than expected, and considering the level of tax rate, the tax rate as usual in our business depends on the mix of the country we are operating. And so it is something that probably we will be able to maintain during the rest of 2026.

So around 30% for the full year?

Yes, more or less.

And the next question comes from the line of Francesco Sala of Banca Akros.

I got 2. The first one is I wonder outside the Middle East, what are the most active areas and the most active segments in terms of commercial pipeline, maybe not specific geography, but at least the area. And secondly, I wonder whether you have noticed any difference or at least a pickup in green ammonia and green hydrogen in the last few weeks.

Talking a little bit what we have in our commercial pipeline because otherwise, we have to talk up to tomorrow morning. But talking a little bit about the let me say, commercial opportunities that we are working on, as I was saying before, most of them are located in new geographies, in particular in South America. South America is particularly active in the gas monetization, which means gas treatment, gas separation and the gas utilized for feedstock to be processed and transformed into other commodities, mainly fertilizer considering that South America agricultural activities represent an important pillar for the local economy. So for sure, South America is due to represent an important step in the growth of our portfolio in 2026, but of course, not only South America. As we have already mentioned, we expect additional further developments in the U.S. as a consequence of the wider involvement in the LNG project that we have already mentioned on behalf of Argent LNG. Then there are also other geographies closer to Italy. And I am mentioning for a while some countries located in the western part of Africa. Northwest Africa could be another region whereby over the next few months, we could be able to get additional awards.

And as far as the potential projects on green ammonia, green hydrogen, I wouldn't say I don't have anything to report on that. But on green ammonia, Sandro just mentioned North Africa but let me add that there are a couple of geographies that are progressing aggressively on the green ammonia project. One is China. The other one is India. They are building the entire value chain to be able to produce efficiently. Let me also mention that the number of projects we had in Europe that were shelved, let me use this acronym for the time being for cost reasons as soon as security of commodities became the main topic, we have seen an interest from those clients to restart discussions in a way. The other area, if I may add to add to what Sandro said, where we see a lot of interest is in sustainable aviation fuel, led by Latin America, no doubt. We have received a lot of interest for our pretreatment technologies for agriculture and animal waste in that part of the world as much as in North America. So I would say that these are the indications we have received from our clients in the past weeks. And I don't know if I answered your question.

So thank you very much to everyone for participating in today's call. For any follow-up questions, please feel free to reach out to the Investor Relations team. Our next earnings call will be on July 30, when we report our first half results. You can also find details on upcoming investor conferences on our website. Thank you again and have a great evening.

Thank you. Thank you to everybody, and see you soon at the next conference call.