NHOA S.A. (NHOA) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and welcome to the investor call on the ENGIE EPS 2019 results and outlook update. [Operator Instructions] This conference call is recorded and the transcript will be available on the corporate website, www.engie-eps.com, in the Investors section. We shall now ask Carlalberto Guglielminotti, Chief Executive Officer, to address the meeting.

Good morning, ladies and gentlemen, and thank you for being with us today. I'm very pleased to welcome you in this morning call on our 2019 results and 2020 outlook update. I'm joined with Stefano Terranova, our General Manager; Andrea Rossi, our CFO; together with Giuseppe Artizzu, our Executive Director for Strategy and Market Intelligence. I will start with a few key observations on the current situation and our numbers. Stefano will then provide an analysis of our results and new organizational footprint. Finally, I will explain the 2020 outlook update. Following the presentation, which as usual you can download from the pop-up appearing on the front page of our website, Stefano and I as well as Andrea and Giuseppe will be happy to take your questions. Before presenting our 2019 results and outlook, I would like to spend a few seconds sharing with you our priorities at ENGIE EPS in light of the COVID-19 outbreak. In a dramatic moment, I personally took the decision to focus more than ever on our sense of responsibility; responsibility, let me say, towards our people, our businesses and our civil supplies first. As entrepreneurs, I feel the imperative to act to protect our employees, addressing industrial challenges to preserve the value we created so far, and support in whatever way we can the efforts to limit the outbreak, being ready to restart faster than ever, let me say, once we get out of this situation. This is what I call all-in commitment. Well, I do not know yet if this will be a major shock to the economy or a pandemic recession, but certainly the COVID-19 outbreak is, first and foremost, a public health emergency which is turning into a human tragedy affecting hundreds of thousands of people. ENGIE EPS, as you know, is based in Italy, the country at the epicenter of the European outbreak. The Italian government imposed the most dramatic steps yet by any state, except China, to contain the surging number of coronavirus cases, placing almost immediately on March 8 the region of Lombardy, where ENGIE EPS has 2 industrial premises, as you know, and more than a dozen of other provinces in neighboring regions in quarantine over the last weekend. Restrictions were extended to the entire country on March 11 and then turned into a full lockdown. At ENGIE EPS, our business model and agile organization, in essence, allowed us to implement a massive smart working plan. Industrial activities in our premises are limited to the essentials to guarantee the business continuity since February 24. So it was the -- to 1 month that we are in this situation here, at least in Lombardy, trying to minimize the impact on our operations and supply chain generated by the strong yet necessary restrictions imposed all over the world. In parallel, we are -- we were huge efforts. We are trying to minimize the related consequences for our sites and products worldwide; in Italy, Mexico, California, Singapore, Comoros and Greece; as well as for our big projects under development, like in Europe, South Africa, Middle East and U.S. and Pacific Islands. For these reasons, we drafted a new COVID-19 policy and even more importantly an emergency management plan, that is our management model since February 24, to guarantee such business continuity based on a firm hierarchy of values as follows, let me say: First, protection of the health of our employees. Our first priority is to keep our people and their family safe -- families safe. Second, the civic responsibility that ENGIE EPS has to demonstrate firsthand and the necessity to ensure that this is also reflected in each of our employees and stakeholders; and then in the third place, in this specific historical moment, the preservation of the ENGIE EPS economic and industrial value. I will give you more details during our presentation, but this is -- this was an important recital to make to me and I'm sure you will understand. Having said that, I will now go through the presentation. I'm on Page 3. I mean you will remember that we've the refocusing and selectiveness approach outlined in the long-term strategic plan announced in June last year. We expected and outlined a lower growth during the transition. Well, this had the short-term consequence of a backlog reduction and the postponement of our 2020 guidance for '22, as you will remember, with the new EUR 40 million guidance set for 2020. In line with that, 2019 has confirmed our growth pattern with a 29% growth to EUR 20 million, in line with the new strategic path. Indeed, those early results under the long-term strategic plan for our Giga Storage product line with utility-scale storage and Solar-plus-Storage projects, and Industrial Solutions -- and the Industrial Solutions product line with microgrids and industrial storage systems. On the one hand, I would say that we've successfully deployed, thanks to the partnership with ENGIE, the Sol De Insurgentes project in Mexico and the commissioning of an iconic, even limited in size, microgrid in New Caledonia. In addition, we progressed to the construction of the projects in Comoros and the storage solution for the Leini power plant of ENGIE, while we successfully commissioned the third stage of our microgrid in Somaliland. Our margins are slightly lower, yes, but it's mainly due to the increase in the size of the projects, like the Solar-plus-Storage project in Mexico, as you can imagine. And we expect this trend in our long-term strategic plan because, I mean, we continue to -- our margin compression for the simple reason that the scale of our projects we focus on, so it's a natural evolution. EBITDA and net income do not outline a poor performance, from my perspective, but a physiological aspect. I mean we are ready in terms of structure, people and industrial premises to address projects for hundreds of megawatts, but such projects are not yet in our P&L. So we just need one more step in terms of scale in order to invert the curve and start generating cash. And this inversion of the curve, in front of our eyes -- I mean because it is true that our backlog is being reduced. I mean this reflects the temporary reduction in order intake due to the fact that several significant projects have been either delayed or not awarded or did not materialize in the preceding months, but we all know that with Guam -- the Guam tender officially awarded and not just declared and successfully bid, I mean our backlog would have been triple, okay? And so this is the reason why I will not focus on backlog reduction while analyzing our 2019 performance, simply because it's a matter of criteria that we use in terms of backlog recognition. And therefore, we want to be strict more than ever in this specific situation on recognition under our KPIs. But actually the most important evidence, I will say, of this inversion of the curve towards a profitable cash generation, let me say -- and let me say our future generally, is written in one single and clear KPI, which is the pipeline of products which clearly represents the solidity of our fundamentals and more importantly the direction towards our strategic plan. You will know that -- I mean in less than 1 year, the evidence of the solidity and more importantly of the potential of our long-term strategic plan and our partnership with ENGIE clearly materialized. I mean we've more than doubled our pipeline and more importantly with a solidity that we cannot even compare to 2018, as we are not talking anymore of a pipeline composed of several projects which complex, maybe in emerging countries, with the related risks and uncertainties. I mean we are talking -- we are already talking about large tenders in Tier 1 storage markets like U.S. and Middle East with more than 1.6 gigawatt hours and a value of more than EUR 300 million, for which we are in the final phase of the tender and ENGIE has already been shortlisted. That's a totally different picture, let me say, which is a testament of the firepower we now have, thanks to the ENGIE group, where our unique know-how and technology can play another championship, let's say, and get scale very, very fast. This is, if I may, the one number we need to focus on to have a clear visibility on our growth trajectory towards our long-term strategic plan and our indicative ambition to make EUR 400 million revenues in 2025, which sounds to me more solid than ever. Having said that, I'm on Page 4. I will now give the floor to Stefano Terranova, our General Manager, to briefly go through the details of our figures but more importantly to give us some color about this pipe and even more importantly the new organization we've had to deliver in a sustainable way the long-term strategic plan. So Stefano, the floor is yours.

Yes. Hi. Good morning. Thank you, Carlalberto. Good morning, everyone. So let's go straight into the meat of the slides. I'm on Slide 4 where we present breakdown of the revenues for 2019. As you can see, the revenues were just above EUR 20 million, 30% approximately increase from previous year. You see that this figure was prominently dominated by the -- our first iconic Color-plus-Storage project, Sol De Insurgentes in Mexico, which represents a very important step towards the new strategic focus that we announced last year. And we can also see that we present -- from now onwards we will present the breakdown in terms of the 3 product lines that we have previously highlighted and recently renamed into Giga Storage, Industrial Solutions and eMobility segments. You can see, once again, both in terms of geography and in terms of sector, of course, the Sol De Insurgentes is very prominent in the revenues of 2019. In the next slide, if we move to Slide #5, we present, as we typically do, our personnel cost. This is the single largest P&L item and the single largest cost item in general for the company. Therefore, we always provide and we will continue to provide details. As you can see on the slide, especially important, if you look at the amount of personnel cost that we account for as CapEx, you will see that we keep a constant eye on the ratio of the total personnel cost in terms of what is capitalized vis-à-vis, for example, other criteria. And one important number we'd like to show here is the fact that 30% of our employees, even as we grow, continue to be highly skilled employees with PhDs or MBAs. The workforce has increased in line with our projection and with our plans, and we're planning to hire more as we prepare, as Carlalberto said, that we have -- we're setting up the platform to address larger and larger projects. And so industrially speaking, we are there, and that's reflected in the numbers. Next slide, Slide #6. The operating expenses, in line with what we have projected, amounted EUR 2.3 million, of which prominently the figure in the middle, we have to spend a fair amount of money on external budgets. And this is mainly in order to not to have too-high G&A, let's say, directly in our books. And then the rest is fairly standard for facilities and corporate operations. Slide #7, nonrecurring expenses, of course always something to be avoided as much as possible, but unfortunately we have to account for EUR 1.6 million of non-expected expenses during the year 2019. We have divided the EUR 1.6 million into, let's say, what we call standard and nonrecurring expenses, roughly 1/3 of them and 2/3 of the -- the remaining 2/3 is what we call transition costs. By transition costs, we mean items which either we had to incur in the transition into the -- for the strategy or that we would have not incurred and have impacts to the new refocused strategy. Next slide, again a very important aspect to highlight for 2019, is that we proceeded with shutting down noncore activities. This had a relatively high price tag of EUR 3.5 million in total. And we decided to provide a detailed breakdown of item by item, let's say, of how this EUR 3.5 million impacted ENGIE EPS. You will see there are 3 -- the most prominent, let's say, of all is the hydrogen -- the shutdown of the hydrogen activities, for which we had to take an impairment of -- on assets of EUR 1.4 million. We had to incur some additional costs for shutting down some ongoing projects and then finally, an inventory write-off of EUR 0.4 million. So of the EUR 3.5 million, approximately EUR 2 million is related to hydrogen. Next slide, Slide #9, and the -- in terms of Capex. As you can see and as expected, the vast majority is related to R&D investments. Again, a novelty in terms of the breakdown. We show you the breakdown of the CapEx of the R&D investments, again, for maybe early into the new families of products. So the control, the store, the move and then finally convert and connect. The most prominent is the control. I mean the control family, we have the Prophet EMS, energy management systems, for which we invested a lot last year. And then the second item would be the K-WIZE, which is a platform to remotely control and manage the plants. Next slide, Slide #10. We just represented the net financial position. As you can see, at the end of the year, we had minus EUR 8 million, negative, because we had to obtain a Société Générale facility, which was provided, thanks to the support of ENGIE. And this facility was drawn for -- and as you can see, at the end of the year, we had resulted in EUR 8 million negative net financial position. Then in terms of -- finally we get to the backlog, which is the figure which is mostly disappointing, as Carlalberto mentioned. Unfortunately, we could not account for some projects that we expected to be -- to move from the pipeline into the backlog and that did not take place, unfortunately, okay? So you can see that the -- we again provide you with a breakdown into Giga Storage, Industrial Solutions and eMobility -- excuse me for a second, please. I'm very sorry. I have had to cough, but given the circumstances, I feel very embarrassed to cough on the phone. That's why I am trying to take a drink. Just 1 second. With regard to the consequences of the COVID-19 outbreak and the related [indiscernible]. Yes, I'm back, sorry. I had to take a drink. Hopefully, this is just a normal cough and nothing else, but I'm back with you. So okay. Back on project backlog in Slide #11. As we said that this figure is disappointing in the sense of that's what -- it's not what we would have expected and it is down from previous year, spending approximately EUR 30 million. We provided breakdown both by the region where the assets will be installed as well as in terms of sector. The so-called sector is -- in reality is the -- you should read as the new product lines that we've just launched, the Giga Storage, Industrial Solutions and eMobility. As you can see, especially the pie chart on the right that shows exactly what Carlalberto has mentioned, was that -- did not work as fast as we would have wished and planned for, the conversion from the pipeline into backlog. And that's why, for example, Giga Storage features is very, very -- in the very, very small terms into the backlog, whereas the very large tenders that we participated in are stable -- let's say, outstanding and stable feature in the pipeline. In fact, if we move to the next slide, Slide #12. This is where you can see the work in progress and how the refocused strategy is working exactly in the direction that we had expected. You see that the total pipeline has boomed to EUR 686 million. And we -- since -- and we decided to provide some detail of the maturity of the pipeline. Of this EUR 686 million, approximately EUR 300 million is what we call short-listed. So those are projects that we have bid, a large-scale standards and well-organized standards, normally publicly large and for which we have been already short-listed. We, either directly or indirectly, mainly indirectly, i.e., for example, ENGIE will have the bidding entity and EPS is exclusive partner for the storage component. The next figure, EUR 92 million, is those bids where we have not been short-listed yet, but we have submitted bids' binding offers and we're expecting results within the next few weeks or months, and includes also projects where we have already entered into exclusive negotiations. And finally, the others is what you would say the unqualified pipeline, turning out EUR 289 million. And there, again, in the pie chart, so you see the Phase 1 divided by Giga Storage, Industrial Solutions, eMobility. Two important comments here. The -- obviously, in terms of Giga Storage, we are there in pipeline where we wanted to be, maybe even higher than normally. I mean we could not always expect the same type of numbers in Giga Storage. And thus, what is still missing is the Industrial Solutions, Carlalberto will explain later on. This is the sector where, of course, we have to put a lot more effort. We wanted to do a full, let's say, review -- strategic review of how to address this market and this segment. And therefore, we have projects which are still in the opportunity pool and have not matured enough to be in the pipeline. And I certainly would expect this segment to be much bigger in terms of pipeline next time we present to you the numbers. And finally, in terms of region of installation, the pipeline has also changed a lot in the sense that, right now, we are focusing on those regions where ENGIE has the largest -- the most opportunity to be successful. And I'm talking about the Giga Storage projects here, of course. And you can see, in fact, that we -- most of the pipeline is dominated by the Americas, which in this case is North America really; and MESCAT, which is the Middle East, South and Central Asia and Turkey. And within MESCAT, you could basically read Middle East and India, sorry. So the next slide, Slide #13, we had already presented with the H1 results of 2019, a segmentation of our products. And now we finally restructured a little bit the -- mainly the naming of the 3 product lines. And from now onwards, we will -- this is the terminology we would be using. We are talking about 3 product segments, 3 lines. The first one is the Giga Storage. It's the one where we propose utility-scale containerized Energy Storage solution. And mainly, the industrial play is the Solar-plus-Storage, which we expect to boom massively; and utility-scale storage like the recent tenders in France for new capacity, which we participated in, but unfortunately, we were not successful. And the next one is the Industrial Solutions, basically storage-based solutions, normally tailor-made to meet the industrial and commercial clients' needs. And here, we're talking about industrial microgrids or storage systems, which either provide a power quality or mostly service type of solutions for industrial clients. Then the next family of products is the eMobility, which is where we deploy our know-how in power conversion to the -- to propose a charging station and specific special charging systems to our clients. In terms of business models, you can see underneath that basically for the Giga Storage, which are very large projects, we'll not normally be engaging as an EPC contractor because of the scaling complexity, but we would offer our services as system integrator and sometimes, obviously, as much as possible, a technology provider offering our own investors. In terms of the Industrial Solutions, we would instead always offer our technology and work as an EPC turnkey contractor. And for eMobility, we can offer the full gamut of business model, from technology provider to system integrator to installation. We proceeded also to a rationalization of our technology platform. The technology platform, obviously, always rests on the basis of the HyESS, which is -- continues to be the center of our product offering. And we have rationalized the technology in 4 families: The so-called store, the so-called Convert & Connect, and then the move and control. Control, as explained early on, is where we have spent most of our R&D last year, working on the Prophet EMS and the K-WIZE control platform. And from here, I will pass on again to Carlalberto.

Thank you, Stefano, for this comprehensive presentation. And let's move on to our 2020 outlook update. I'm on Page 16. Then in this slide, you see clearly the positioning we currently have in the market, and we designed it to make an analysis based on the 2015-2019 announced storage capacity worldwide, which has been 35 gigawatts, just to understand where we are and how we moved in the last 5 years, so since our IPO. Current situation is clear. We have almost EUR 30 million backlog and EUR 686 million of project pipeline, but where we have positioned? So we see clearly that we have projects online and under construction now in Mexico, Italy, Greece, Somaliland and Comoros. And we see a clear positioning, with less short-listed in -- 300 megawatts in the U.S.A.; U.S. islands, Guam, Palau, New Caledonia; and particularly in Middle East. Then there are projects in which we didn't position. As we mentioned in our press release, we -- obviously, we were disappointed because some projects did not materialize, others were delayed. In others, we have been unfortunate and in the end we didn't get the project. And then the -- because of these positioning delays, which is one of the rationale behind our guidance withdrawal, one might be scared or may have some doubts on our position, but this slide clearly represents it is not the case because the areas and the countries in which we positioned very clearly accounts for more than 40% of the markets. Therefore, even if we would obviously prefer to win some bids or to position more and more successfully in the market in some projects we have in France or in North Africa or in India, reality is that the market there is absolutely limited compared to the potential we have between United States, South Africa and Middle East. And that's one of the main reason behind the positive message we would like to share with you today. Then moving to Slide 17, we have some highlights on our 3 main product lines. Giga Storage is, by far, our product line which is the most promising. And the -- for sure, it's the product line that will decide our future and on which we are absolutely confident we might deliver our long-term strategic plan. We see clearly that in 2 large bids for more than 1.6 gigawatts and EUR 300 million potential revenues, we're being short-listed. Those projects, however, are large-scale projects. For that reason, COD sort of commissioning is expected between 2022 and 2023. So you also see the horizon in which we are now moving, and that's one of the reason why we are investing today. We are participating to bids today in order to deploy by that date that amount of gigawatt. You see clearly some iconic projects in this slide. The 300-megawatt Solar-after-Sunset project in Guam, awarding was expected in May. 200 megawatts submitted by ENGIE in Middle East. 1 gigawatt tender with -- is a new tender that will be launched very soon, in which we are positioning. In Palau, we launched last year 3 offers in the context of the tender process. The Asian Development Bank has been appointed, and the project is 50% in terms of size compared to the original Armonia project and the outcome is expected in April. Then very soon, we'll be launching in Italy a 100-megawatt auction for Fast-Reserve, in which we are positioning now together with ENGIE Italy. And let me say, more importantly, in U.S., generally, we have 3 gigawatts submitted by ENGIE, 1.2 already short-listed. And in South Africa, 1.4 gigawatt power tender, let me say, project funded by the World Bank, in which we are positioning. I'm on page, now, 18, Industrial Solutions. I mean one message behind this slide, obviously smaller sizes, which corresponds, in principle, to smaller revenues. However, we see the early results of our long-term strategic plan because we already have in our -- not in the pipeline, but in the opportunity pool more than EUR 200 million projects in terms of microgrid, hybrid storage and power quality systems between Europe, Latin America and U.K. So the most, let me say, important aspect to be highlighted is that 2/3 of those projects are now in U.S. and Europe. So from -- that's also part of the de-risking strategy that we announced last year in the context of our EPC activities, but this is, again, a testament on the fact that in terms of pipeline, in terms of opportunity pool, not only the solidity of that pipeline is not even comparable to the one we announced last year, but more importantly also, we are developing projects in countries that have a profile that is totally different and that reduce dramatically the risk of execution and of closing the base, having a clear process or tendering process behind and eventually winning the bid and eventually generating revenues. I'm now on Page 19. Some news from that perspective, you know we worked a lot. We announced -- we worked out since 2016, 2017 in eMobility. We announced the first time last year, together with ENGIE and FCA, a broader partnership. And then here we see the results of this full year effort, which turned into 2 products that have been launched, jointly announced with Fiat Chrysler and that will be present in any FCA, and more precisely, Jeep fleets and Fiat electric vehicles going forward as a standard device included in the car or as an optional, this will be determined from the strategy, but for the Easy Wallbox, it is pretty much clear that we already set our production, planning up to 50,000 units in the next 12, 18 months. The Easy Wallbox, you would have seen the announcement, a really innovative solution protected by patents. It's the only flexible charging device in the market because it's between 2.2 up to 7.4 kilowatts. No installation required. You can just walk out of the car dealer and plug the Wallbox and charge your car. And with no installation, you have up to 180 kilometers autonomy at night -- in 1 night, running just at 2.2 kilowatts. So without entering to the details, this is just to say you may recognize the importance of this deal and how much it represents in terms of positioning in the eMobility sector. So first of all, in terms of the iconic, let me say, and unique feature of the product that is well-recognized in the market, also thanks to the joint communication campaign we made with Fiat Chrysler, but more importantly, in terms of volumes, that's just a start, as you can imagine. And 50,000 units in the EV market, to give you an idea, through the end of last year, we had less than 2,000 -- 200,000 charging stations in Europe, so 50,000 is a very relevant and material figure in terms of volumes. Then last but not least, a goal, the V2G project, the Vehicle to the Grid project, which will be -- that we will develop in the -- close to the Mirafioni plant, which is one of the production facility of FCA. This will be the largest Vehicle to the Grid project worldwide. The first phase, we will have 64 cars and -- 64 EVs connected with approximately 2 megawatts output, providing grid services. And the full project develop -- this phase will be online nearly Q3, but the whole project accounts for more than 700 electric vehicles and up to 25 megawatts of power coming from the batteries of the car, passing through our technology and then eventually providing grid services at a lower cost just using the car fleet parked in this car park. Then moving to Page 20. The second reason of our guidance withdrawal is obviously the COVID-19 outbreak. We are both in -- I mean I don't want to enter into public data details. We saw the turmoil in global markets. We saw the closure of external borders, supply chain, travel bans, with a humanitarian tragedy of 200,000 -- more than 200,000 reported cases in 150 countries. Then I'm on Page 21. The outcome of this positioning and COVID-19 consequences is -- has been clear because we analyzed, as a management team, several scenarios in terms of revenues, in terms of growth, in terms of pipeline conversion. And as you would imagine, in this dramatic moment, volatility on pipeline conversion to backlog is huge. I mean essentially, all the auction processes are at stake. Site visits and hearings have been canceled or postponed to a date which is not yet defined. Travel ban for project development teams obviously is a big project -- is a big problem in terms of conversion to backlog. And also, for all our projects with B2B customer, we experienced and we noticed essentially a total CapEx and funding freeze, particularly in developing countries. Then second aspect in terms of outcome, volatility on backlog conversion to revenues and, more importantly, in light of our 2020 guidance, backlog -- volatility on backlog conversion to 2020 revenues. You may even imagine supply chain -- the supply chain disruption that we had, small and medium enterprises in general in Italy but particularly in Europe, in this specific moment, had reduced or even interrupted operations. We have, as I was mentioning earlier, a rationed access to production plants and to ensure safe working conditions, our offices in our production plants are open but limited to the access to guarantee business continuity; and again, the travel ban. Then I already mentioned that our business continuity emergency plan was based on our firm hierarchy of values: to the health of our employees, the civic responsibility and the preservation of ENGIE Eps' economic and industrial value. And in light of all the above, that we had yesterday a Board meeting in which we analyzed those scenarios, and those scenarios do not give any visibility because the volatility in terms of, again, tightened conversion to backlog and eventually backlog conversion to 2020 revenues is unsustainable in terms of financial information to the markets. And that's the reason why we decided to withdraw the guidance. And we cannot commit to any alternative target for 2020, while let me say, our '22 guidance, so the EUR 100 million guidance, given the current pipeline, we, -- frankly speaking, we -- it is not [ cashed now ] by -- particularly by the COVID-19 outbreak. But we have to update the markets as soon as the situation is overcome, for obvious reasons. We remain -- and then moving to Page 22, in any event, positive in this dramatic situation but confident in our strategic plan. Because as you will remember, we have EUR 100 million guidance in 2022 in terms of revenues and then indicative ambition of EUR 400 million of 2025 revenues. I mean, first of all, if you look at the pipeline today, if you look at the solidity of the pipeline, those figures are not just achievable but are absolutely reasonable. So if you want to use a book-to-market approach looking to our fundamentals, that's the plan that still is valid, still is solid and still is credible, more importantly. Then let me say, leaving aside for a while the COVID outbreak, that I want to assume, and I hope and we all pray that this COVID outbreak tragedy will be a temporary and a limited-in-time tragedy. I mean there is no reason to have any doubt on our ability to deliver this plan going forward. And even if with -- for our sense of responsibility, we decided to withdraw the 2020 guidance, this does not affect the solidity of our fundamentals, the solidity of the pipeline and then the solidity of our long-term strategic plan. You may look to some figure which is pretty much clear. I mean EUR 400 million represents 4 gigawatt-hours deployed. So to remind you a couple of figures, we are already short-listed for more than 1.6 today. Project expected to COD between 2022 and 2023. So if we just continue this trend, it is absolutely reasonable. And then if you want to compare it to the market share, I mean the new built in the market is absolutely limited because it represents -- 4 gigawatt-hours represent 2% of the market share, excluding China, Korea and Japan. And even if we want to take the most conservative approach and say, "Okay, we were really unfortunate. We didn't position together with ENGIE in some tenders, in some opportunities. And therefore, I would assume that EPS and ENGIE would never position in those markets." Okay? So let's assume that we were just positioned in the market in which we already are positioned, in essence, Middle East, U.S. and South Africa. Then in this case, 4 gigawatt-hours represent 4% of the markets. And in the chart on the right -- in the graph on the right part of this slide, you see evolution of the market. I mean 2015, 2016, 2017, I mean small projects, okay? But then the market blew up in 2018. That was the year of the acquisition from the ENGIE group. And then in 2019, we already see the result in terms of positioning by ENGIE, which is present in 10% of the 16 gigawatt-hours, which has been short-listed, as I said, 10% of the gigawatt-hours announced in the market in 2019. So that's the reason why, generally speaking, even if we decided responsibly to analyze the volatility of this dramatic scenario, we have responsibly outlined to the market that the rationale behind the guidance withdrawal is twofold. It is, one, first of all, delay in positioning; and second, the COVID-19 outbreak. But going forward, and hoping that this crisis will be a temporary one, we still believe in our strategic plan and in ENGIE. And we are clearly seeing, as a team, that the results of our long-term strategic plan and with no doubt on the solidity of our future and on our delivery capacities. Then with that, let's now take your questions. And together with my team, we are ready to answer to any questions you may have. Thank you.

[Operator Instructions] The first question is from Jean Belanger with Societe Generale.

The first one would be about the FCA deal. Would you be able to maybe give some figures about what could be the impact of the deal in terms of additional revenues on your P&L?

[Foreign Language] Jean-Michel, many thanks to -- for your question. Very good question. I mean the pricing, obviously, we already given some color to the market in terms of expectation from the production perspective. What is missing, to give the full color, is the price. So I can refer to a public data because it was announced by Roberto Di Stefano, the Head of e-Mobility of FCA, during our press conference. The price of the Easy Wallbox will -- that will be launched in the market is not yet public. So by definition, the strategy is outlined by FCA. But he said very, very, very clearly that the price would be well below EUR 500, okay? So you may exclude the VAT effects, and you may have some color on that. Frankly speaking, the Easy Wallbox, first of all, is a good deal and is a big deal. But from my perspective, looking just to the first figure of the first 12 months of what we planned is really limiting in terms of upside because in this market positioning -- in the eMobility market, positioning is of essence. And having already planned 50,000 units, these are giving, to ENGIE Eps, a role and a credibility in the market that is opening other kind of opportunities in terms of volumes, in terms of products. So let me say that Easy Wallbox, for sure, will provide profitable volumes, also in terms of revenues, not only in terms of units. But this is just the beginning. This is just the beginning, and we are very confident on the launch of other products with other brands, maybe within the same FCA Group. You know they have also Maserati and other iconic brands within the group. And therefore, I will consider the Easy Wallbox contract just the beginning, and same reasoning for the V2G project.

Okay. But basically, the revenues for you from this project or from other projects with other brands would come from the design of the global architecture, isn't it?

No, no, no. Maybe -- I got your point. Maybe you are missing because I have not been clear. The so-called FCA deal, that was the electrification of dealers and so on, that was the deal signed by ENGIE together with FCA with this contract. We are talking about a totally different story. The Easy Wallbox has nothing to do with the so-called FCA deal, okay? The FCA partnership that was announced between ENGIE and FCA. This is a sale contract, okay? A contract we signed directly with FCA. And we designed, manufactured and supplied to FCA, including intellectual property and so on, the Wallbox. The technology is 100% ENGIE Eps. The patents are 100% ENGIE Eps. By the way, one of the most important feature of the Easy Wallbox is that's guaranteed the stability of the grid in your house. So you will have no blackouts. So we have a piece of our microgrid technology also in the Wallbox. And this product, obviously, together with our industrial partners, will be entirely designed, patented and manufactured by ENGIE Eps. So it has nothing to do with the FCA dealers' electrification. That was a deal, if you remember, announced by ENGIE, in which the Wallbox and the charging devices were provided by EVBox, which is another company of the ENGIE group. So the -- no global architecture, but technology, industrial operation, sales, revenues for ENGIE Eps. This is the framework of the deal. And 100% revenues for us, obviously, to clarify.

[Operator Instructions] The next question is from Giancarlo Bollero with Algebris.

Now I wanted to ask a question following up from the previous question and then ask another one regarding backlog. So as for the FCA, you said that this has nothing to do with the FCA partnership signed between FCA and ENGIE. I was wondering if you had an update on the agreement between ENGIE and ENGIE Eps regarding that specific work -- line of work. And then the other one is, I can see from the press release that you came out with a backlog revision. I wanted to know if you can give details of where the backlog was revised. And then what are the projects that didn't materialize? Because I can see that you're very much tied to basically what you do with ENGIE, and I understand that. But I just want to understand what are the ones that did not take place and if you can give explanation as to why?

Thank you for your question, Giancarlo. Then in the right order. FCA deal update, this is -- I take with this one, also the third one, the third question you made. One of the projects that did not materialize was our, let me say, expanded role as a turnkey provider in the context of this deal. So this is what we said clearly without referring to the customer, for obvious reasons, in our press release. But again, even if this expanded role as a turnkey provider or large industrial project like this one did not materialize, did not materialize not because of ENGIE but simply because in a decentralized organization, which is the ENGIE group, it is -- was extremely difficult and problematic to implement a role of ENGIE Eps, so important and within the context of a group that is so decentralized, which is not a problem but, from our perspective, obviously was disappointing. But the evidence of the fact that the work we have done with FCA was so, let me say, intense and solid is the fact that irrespective of this disappointing aspect of the story, which is the inability to position as a single provider and turnkey provider for the whole FCA Group within the ENGIE group, which obviously has reduced our backlog and our revenues, for obvious reasons. However, we have been able to sign the hybrid -- the Easy Wallbox contract and the Vehicle to the Grid. So that is the reason why this shows you the resilience that we have. So because sometimes you lose, sometimes you win. And then I will address your second question and more extensively the third one. But we showed clearly our resilience after this project did not materialize because we had the ability to sign additional deals and to do additional business with the customer. Then on your second question, backlog reduction, I mean, today, we didn't announce any backlog reduction. There's a backlog reduction in relative terms compared to last year. Obviously, the backlog we announced last year was converted into revenues. And then the new order intake has not piled up as expected. And then in relative terms, if you compare the backlog we had last year and the backlog we currently have, it's a reduction by 18%, okay? In such terms, we had a backlog reduction. So is that -- and the only reason of this reduction in backlog is simply the fact that our order intake was lower. And therefore, we have not been able to pile up contracts and securing future revenues as expected. Directionally, our -- obviously, as mentioned, the projects that we've not been awarded with or did not materialize, I can give you some color. But it's already written in the press release. I mean the project with ENGIE in France, the ERC tender, ENGIE was not awarded. I mean this happens. Sometimes you win, sometimes you lose. Others have been delayed like in U.S. and Pacific Islands, those are public data. And the projects that did not materialize like tenders in India or in North Africa. In the end, ENGIE decided to not bid for strategic reasons. And frankly speaking, we cannot complain with that because even if, we would have been pleased to participate and glad to participate in this tender, in reality, we cannot, let me say, oblige our industrial partner to bid worldwide. So they decided strategically where to bid. One choice was United States, another one was Middle East. I mean we have enough. Obviously, we would like to participate in tenders all over the world. But also in terms of engineering capacity and local presence, you have to follow up. You can easily imagine that the fact that some -- there is a joint decision on any decision to participate or not or in what architecture of the deal, it is a decision that we cannot drive and, frankly speaking, every other opportunities where we are not worried about. On the fact that -- that's your point -- your third point, we are [ tied ] with what we do with ENGIE. Yes, but there is no secret behind. I mean it's not -- it's clearly written in our press release now when we say successful implementation of our long-term strategic plan. It's predicated upon ENGIE Eps prioritizing the resource allocation and just supporting ENGIE Eps in projects that make sense for both companies. I mean it's clearly written and is an obvious analysis. We cannot participate, as you know, with -- or at least that we'll be surprised to participate in a tender as a technology provider of one of our major competitors, okay? So that's -- well, not even necessary to write. From my perspective, was obvious. We decided to do it just to, let me say, to complete the picture around our 2020-2025 long-term strategic plan. So no, I don't see the issue, frankly speaking. That's the reason why we decided to join the ENGIE group, to set a partnership, as you will remember, was essentially driven by the fact that we selected the partner we believed in, we continue to believe in, as I clarified in my presentation. And okay, sometimes you may have bad news. Sometimes you win, sometimes you lose. But visibility and fundamentals on our growth, on our industrial plan and more importantly, on the fact that ENGIE is positioned in the market successfully, frankly speaking, from the Eps management perspective, is there, okay? So we have been disappointed for some contracts, for some decisions, but we are not -- this has not impacted, in any manner, our confidence to deliver within the ENGIE group -- with the ENGIE group because we believe in and obviously we have to work with them, and we are glad to work with them in order to be competitive and to become a leader in storage. We have a joint strategy from that perspective. So I'm not worried about.

Can I just follow up on the first one, on the FCA one? You said that you're not playing a turnkey role, the turnkey solution for the FCA project. But -- so has the economic sort of benefit of that partnership being allocated yet? And can you give more details on that?