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

Hello, and welcome to Maire's First Half 2026 Results Conference Call. Please note this conference is being recorded. [Operator Instructions] I will now hand it 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 Half 2026 Financial Results Conference Call. My name is Silvia Guidi, and I'm the Head of the Investor Relations Department. Today, I'm joined by Alessandro Bernini, CEO; Mariano Avanzi, CFO; and Fabio Fritelli, Nextchem's 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. The first half of 2026 once again highlighted the resilience of our business model amid the ongoing geopolitical tensions in the Middle East. Even in this challenging environment, which continues to be characterized by stringent safety protocols, project execution continued without major disruptions, reflecting the strength of our operating platform and the close cooperation with clients and subcontractors. Leveraging our ability to manage complexity across a diversified project backlog, we delivered solid financial results. Revenues reached EUR 3.7 billion and the EBITDA margin improved by 50 basis points to 7.2%, benefiting from the growing contribution of Nextchem technology portfolio. In June, we also completed the acquisition of Ballestra and ETEK, expanding our presence into inorganic chemistry for fertilizers and critical materials, both companies will contribute to our P&L results starting from the third quarter. The solid operating and financial performance was complemented by a strong order intake of EUR 7.2 billion in the first half of the year, corresponding to a book-to-bill ratio of 2 and leading to a group backlog of EUR 16.3 billion, close to its all-time high. Including the contract secured in July, total new awards have already reached EUR 8.4 billion in the first 7 months of the year, bringing us close to the EUR 9 billion full year target we had set. This acceleration reflects stronger-than-expected demand backed by energy security and industrial resilience concerns across the board. Equally important, this commercial momentum is enabling us to expand our geographical footprint and enter new markets. In this respect, Argentina represents a significant milestone in our diversification journey. Through the Fertil Pampa project, we will deliver the largest urea plant in Latin America, combining Tecnimont's execution capabilities with Nextchem's proprietary technologies. This award further validates the strength of our integrated business model and our ability to offer clients end-to-end solutions. Importantly, we are entering this new market with a derisk execution approach by focusing on our core engineering and procurement expertise while construction activities will be carried out by SACDE, a leading Argentina contractor with extensive local experience. This first major contract creates a platform for future growth, positioning us to capture additional opportunities across the wider Latin American market. As our backlog continues to expand, strengthening our engineering capabilities remains a key priority. In the first 6 months of the year, we added around 500 professionals strengthening our capabilities in fertilizers and in the chemistry of minerals and metals through the acquisition of Ballestra and ETEK and while enhancing our LNG expertise through targeted hiring. At the same time, we reinforced our proximity to key growth markets with the opening of Nextchem Beijing office, establishing a strategic hub within one of the world's leading industrial ecosystem for next-generation industrial technologies. And now let me leave the floor to Fabio for a detailed look at the STS operational performance.

Thank you, Sandro, and good afternoon, everyone. Thanks to the recent awards and the completion of the Ballestra acquisition, Nextchem enters the second half of the year with a record backlog of EUR 702.6 million, leveraging a technology portfolio exceeding 80 solutions. The EUR 506.9 million (sic) [ EUR 556.9 ] order intake in the first half, which includes the consolidation of Ballestra's portfolio for EUR 265.3 million reflected a well-diversified exposure across fertilizers, specialty chemicals and advanced materials, confirming the relevance of our offering across multiple value chains and geographies. More broadly, we are seeing strong commercial momentum in fertilizers, and we are focusing on large-scale integrated projects where Nextchem can maximize the value of its platform by offering a full package, including licensing and proprietary equipment as demonstrated by the recent Fertil Pampa award. Let me now briefly walk you through our recent M&A transactions and explain how they strengthen Nextchem's growth platform for future commercial prospects. At the end of June, we completed the acquisition of Ballestra for a total consideration of EUR 184 -- EUR 148 million. The group comprises Ballestra, including the Mazzoni brand, a global leader in detergent and surfactant technologies Buss ChemTech specialized in fluorine derivatives and gas liquid reactions and Ballestra India, the engineering hub in Bangalore. Together, these businesses bring market-leading solutions with a proven track record of over 6,400 plant preferences worldwide, significantly accelerating the development of Nextchem's technology platform. It expands our portfolio across the full NPK fertilizer spectrum, the chemistry for strategic materials, particularly critical minerals and metals processing, while providing access to global consumer goods customers through soap and detergent solutions. We have already started working closely with Ballestra's commercial teams on a number of opportunities, and we are encouraged by the early signs we are seeing, including promising cross-selling potential. Last month, we also completed the purchase of a 70% stake in ETEK for a total consideration of EUR 11.1 million, of which EUR 5 million was paid upfront with the remainder linked to earn-outs. Through ETEK, we gain exposure to the rapidly growing electronic waste stream with proprietary solutions characterized by high recovery rates, feedstock flexibility and improved energy efficiency. The transaction marks our entry into the attractive precious metals recovery market, and adds advanced technologies to Nextchem's circular solutions platform. We are already seeing solid commercial interest from our existing waste management customers, providing early validation of the attractiveness of this value proposition. Together, these 2 acquisitions are part of a broader strategic initiative aimed at expanding our technology portfolio in mineral and metal processing with a particular focus on strategic and critical materials. We see significant long-term potential in this segment and intend to further strengthen our capabilities and market position through continuous investments, including additional targeted M&A opportunities. I will now hand it back to Alessandro for the operational performance of the Integrated E&C Solutions business unit.

Thank you, Fabio. So turning to our integrated E&C Solutions operations, let me provide you with an update on activities across the Middle East, where around 2,500 of our engineers and technicians were deployed at the end of June. As I mentioned earlier, our projects continue to advance through construction and commissioning driven by the viability of key equipment and materials already on site as well as by a wide range of mitigation actions implemented with our client. Through proactive planning, rapid logistics reconfigurations and close coordination with our partners, we continue to ensure operational continuity. For example, all items suitable for container transport were successfully rerouted to alternative trucking and air freight routes, while oversized equipment is expected to continue being shipped by vessel, supported by dedicated local logistics arrangements. At the same time, we are diligently documenting all mitigation related impacts for the recognition of cost escalations. Looking more closely at Hail and Ghasha, the project reached 75% overall progress at the end of June. This scale of execution is reflected in the hundreds of thousands of cubic meters of concrete poured and tons of steel structures installed, supported by a workforce of 31,000 people currently on site, including construction subcontractors. Maintaining this pace, required a highly coordinated effort. Following the reduced operability of the Strait of Hormuz, around 600 shipments were rerouted through alternative ports and approximately 1,500 containers were successfully delivered to the site. These actions have allowed construction activities to continue without major disruptions. Through continuous engagement with our client, we have also identified multiple execution pathways to support uninterrupted project progress going forward. Moving on to our commercial performance. E&C's order intake reached EUR 6.7 billion in the first half and following the award secured in July is now approaching EUR 8 billion. This acceleration reflects clients' growing need to secure execution capacity for large and complex projects. As a result, our E&C backlog increased to EUR 15.6 billion at the end of June and includes projects across our core segment, spending gas processing, petrochemical and energy infrastructure upgrades with completion dates extending through 2031. Before handing over to our CFO for a closer look at the financial results, let me briefly walk you through the backlog schedule of this business unit. With EUR 15.6 billion backlog at the end of June, further strengthened by July award, we have built a strong foundation to navigate a volatile environment. Based on the information currently available, around 20% of the backlog is expected to be executed in the second half of 2026, which substantially covers this year production while approximately 40% is scheduled for 2027 and another 40% for '28 and beyond. Importantly, this visibility is supported by a healthy mix of early and later stage projects and a diversified geographical footprint with a growing contribution from Africa, Central Asia and South America. And now I hand over to Mariano for the financial review.

Thank you, Alessandro. Our first half group income statement continues to demonstrate our resilience through profitable growth. Revenues reached EUR 3.7 billion, up 6.9% year-on-year, driven by steady project execution. EBITDA was EUR 266.2 million, up 14.7%, supported by higher revenues and improved operating leverage. This resulted in an EBITDA margin of 7.2%, up 50 basis points, also thanks to the contribution from Nextchem 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 157.2 million, up 18.3% with a margin of 4.3%, up 40 basis points. Group net income was EUR 137.9 million after EUR 19.3 million of result attributable to minority shareholders, mainly related to Nextchem and projects in joint venture. Let's now analyze our financial results by business unit. STS delivered revenues of EUR 285.7 million, up 46.9%, an increase mainly driven by low carbon chemicals and fertilizers. EBITDA rose to EUR 68 million, up 39.9% with a margin of 23.8%, reflecting the contribution of proprietary equipment in the product mix during the period. As a reminder, Nextchem's first half results do not yet benefit from the consolidation of Ballestra and ETEK. Integrated E&C revenues were EUR 3.4 billion, up 4.5%. Growth was driven by the steady progress of projects under execution across our portfolio. Alongside the continued advancement of projects in the Gulf region discussed earlier by Alessandro, we also recorded solid execution progress in Kazakhstan and Algeria. EBITDA was EUR 198.2 million, up 8% with a margin of 5.8%, up 20 basis points. Let's now analyze the cash flow dynamics of the period. The strong operating performance delivered in the first half allowed to support investment in technology expansion and continue rewarding shareholders. As a result, we maintained a solid adjusted net cash position of EUR 301.1 million at the end of June. CapEx amount to EUR 204 million, primarily related to the acquisition of Ballestra and ETEK. The remaining portion was invested in development and scale-up of proprietary technology as well as in accelerating digital innovation initiatives. At the same time, we returned EUR 194.4 million to shareholders through dividends and EUR 81.1 million through share buybacks. This concludes our financial review. I will now hand over to Alessandro for his closing remarks.

Thank you, Mariano. Thank you. As we look forward, we continue to see a supportive market environment reflected in a commercial pipeline exceeding EUR 61 billion without considering any potential activities without, let me emphasize this word, without considering any potential activities to rebuild energy infrastructures in the Gulf region. This set of opportunities is underpinned by powerful structural drivers from energy and food security to the increasing impact of geopolitical tensions on global trade and industrial resilience. We are well positioned to benefit from this environment, particularly through our integrated offering. A significant portion of the pipeline consists of projects where Nextchem's proprietary technologies are combined with Tecnimont's engineering and execution capabilities. We have also experienced an acceleration of final investment decision as evidenced by the EUR 8.4 billion of awards already secured in the first 7 months of the year, bringing us very close to the EUR 9 billion full year target we have set. Based on the current negotiations, we expect that the order intake to exceed this amount in 2026. In particular, looking at the near-term outlook, we see further attractive opportunities in Latin America, especially in gas processing as well as in Europe across biofuels, mainly SAF and renewables. Looking further ahead, both North and South America and Middle East as well are expected to contribute with opportunities in LNG, gas processing and fertilizers, including large-scale projects expected to be sanctioned in 2027 supporting the long-term growth of our business. So just to conclude, our first half results demonstrated the strength of our -- the resilience of our business model. Steady execution, strong order intake and high diversified backlog enabled us to deliver a solid financial performance even in a complex operating environment. Looking ahead, the mitigation measures already in place in the Middle East, combined with the close collaboration we continue to maintain with clients and partners are expected to sustain the project execution through the remainder of the year. Alongside the increasing contribution for projects in other geographies, they provide a solid foundation for achieving the targets that we have set for the E&C business unit. We have also significantly strengthened Nextchem with the acquisition of Ballestra and ETEK. These businesses not only expand our technology offering, but are already enhancing our commercial reach and creating new opportunities across a broader customer base. From the third quarter onwards, they will also start contributing to our financial performance, supporting Nextchem's growth trajectory in the second half of 2026. We also continue to selectively pursue additional M&A, particularly in the processing of minerals and metals in line with our strategic priorities. On this basis, we confirm our 2026 guidance. And this concludes our presentation, and we are now ready to take your questions. So operator, please.

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

I have two, if I may. And the first one is maybe, let's say, a bit tricky. Sorry for that, guys. But just coming back on the Middle East, you have given us a lot of clear information on how you manage in a way the closure of the Strait of Hormuz with the alternative route, the freight, et cetera. And we have seen a number of companies this quarter adding additional costs to their P&L, saying that it's subject to negotiation with clients, et cetera. So I was wondering if you can share with us in a way those additional costs that you have seen on your side with the truck, the ports, maybe the storage, the flight, et cetera. Have you considered those costs in your P&L already? What has been the payments received from the clients? So just to understand up to now, what has been in a way paid by Maire in terms of additional costs and what has been covered by clients, et cetera? Sorry, you provided us a lot of information on how you manage the situation, but just to understand very well how it's in a way lead in terms of accounting costs, et cetera. And the second question is maybe easier for you. In a sense, you upgraded the order intake guidance because you were telling us up to now around EUR 9 billion and now you are telling us at least EUR 9 billion. What kind of key opportunities do you have for H2 '26 orders that would be material on the order intake side, please?

So Kevin, let's start with your first question. First of all, let me say that I don't care very much about what the other contractors have said or what they are doing. I am more interested, of course, to our situation and to manage properly what is going to happen or what will happen in the meantime. As you have already mentioned, we are talking about extra cost, which have been caused by extraordinary events beyond the possibility to manage them by the contractor. So apart -- and I have to say that apart from the contractual protection I have to confirm precisely that the behavior of the client located in that part of the world are extremely reasonable and cooperative. They recognize that the nature of the extra cost must be reimbursed. So they have already opened a specific process aiming at collecting the amount that we have incurred. So we have no doubt that the extra cost that we have incurred and eventually we will incur in the future will be covered, will be reimbursed by the client. For this reason, we have no doubt and for this reason, the extra cost have not influenced the result of the period nor will influence the results that we expect to deliver at the end of the year. This is our position as far as the extra costs are concerned. Then as far as the commercial pipeline and the opportunities that we see in front of us in the incoming, probably weeks, not months, weeks because some of them based on what has been already cleared clarified by the clients, they would like to sanction some of the project that we are working on from a commercial standpoint during the month -- even during the month of August. So we expect that most likely in the third quarter, additional projects, additional contract will be signed and additional award will be secured by our group. And which are, as we have already clarified during the presentation, some of them are located in Europe because there are a couple of projects very interesting because one of them relates to a major SAF plant located in Europe, whereby our expertise in managing these type of technologies will be extremely helpful. So we are confident that based on the ongoing discussion, this could be secured very soon. Then there are another project in the petrochemical space, not a big one, because as you know, petrochemical infrastructures are -- have not the same appeal of as they were in the recent past. But there are still some specific projects concentrated on some specialties which we know very well how to execute them and we are looking carefully at the possibility to secure one of them once again in Europe on a E&P basis, engineering and procurement, leaving the construction to somebody else will not belong to ourselves,. Then renewable. Renewable, very big renewable infrastructures are going to be sanctioned. The various potential clients have already secured the relating licenses, so everything has been already submitted. So now it's just up to them to decide when they want to start. So I'm really confident that putting everything together, the target of EUR 9 billion that we have set for 2026 will be -- we are very well-positioned to exceed even significantly the amount of our guidance. So really, I am very, very positive. I am not mentioning, of course, other project, which for sure will be signed, will be awarded in the second half of the year, but they do not have a very big size because we are talking about the feed. So which means the first step of giant projects for which then the EPC project will follow, but not in 2026, will follow in 2027. So in other words, in the second half of the year, most likely, we will be engaged in the first part of the engineering activities, which then will follow -- will roll over to the EPC, but only in the spring time, first quarter, second quarter of 2027. And we are talking about super giant projects that most likely we'll pay attention to them through alliances with other contractors based on the expectation also of the various clients. So this is what we have in front of us in the second half of the year.

The next question comes from the line of Massimo Bonisoli of Equita.

I have 2 questions. And one back to the Middle East, sorry for that. I will try anyway. Could you provide some color on the main challenges, if any, you are facing in negotiating the cost recovery with clients, in particular, on which cost are discussion mainly focused on? And the second question on cash flow, on the operating cash flow, which was pretty strong in second quarter and with a very high conversion, likely enjoying some tailwind from net working capital. Can you give us some more color on cash flow generation for second quarter and net working capital?

Let me start with your first question and then hand over to the second one to Mariano. It's not a matter of challenging for the extra cost, Massimo. It is -- you have just to justify and to properly document them and then there are no discussion at all. The various clients, but in particular, one located in the area has already opened the process, which is based on 3 different streams. The first one related to the collection, to the collection of the direct cost incurred. Of course, the major cost -- the extra cost related to the logistical cost because as you know, very often, we have been obliged to reroute the goods, which was expected to be delivered straight two ways, and then we have been obliged to reroute in another way. But to the extent you are able to document and justify those costs, there are no discussion. No discussion. So I don't see really any challenge in having recognized the coverage of those costs. Of course, then this is the first stream. Second one relates to indirect costs. So the cost -- the extra cost generated by the increased general cost due to the conflict in the Middle East. But also in this case, to the extent you are able to prove and document properly, there are no discussion. We have already had this experience in the past when we have managed properly the cost associated with the COVID, when we have been obliged to leave Russia, all of them were very similar, very similar circumstances, and we have never lost even EUR 1. And considering that in these circumstances, the behavior, the attitude of the client is even more positive, I do not expect to face any major challenge.