Somec S.p.A. (SOM) Earnings Call Transcript & Summary

Good morning, everyone, Welcome to the presentation of consolidated results, the first half 2026 of Somec. [Operator Instructions] Now I will leave the floor to Mr. Daniel Becat, CFO of Somec.

Good afternoon, everyone. Let's start this presentation by going through the relevant KPIs for the half for the first half. And let's start from one of the most important KPI is backlog. So the order collection in the first half or better 9 months, so until today, September 2026. As you can see from the table order collection included all the 3 divisions and Horizons Talent and Mestre. So this is provision of both in 1 orders connected in this exceeding 0.5 billion orders value. In addition to this, is a significant order that was announced some days ago of our [indiscernible] for which we were able to evolve, so to speak of the exact amount, but for private reason, but this also and large is our portfolio. And you can see this picture of these very important order 836, 000 as meter in the center of Manhattan 350 even in New York. It's a distinct element is the size of the project and it's prestige in terms of the architect and also the development company. So it was designed by Foster partners. For us, of course, it's throughout of these acquisition and also a change in the scale of a project apolitSo far. So it's really confirmed this growth and also recognition of fabric in the field of continuous in the U.S. In addition to the announcement, you may see starting from January that we have been collecting orders consistently also following up what we ran last year. So it's a very lively market in the cruise sector and also reflecting our field, both glazing professional cooking equipment and interior. Again, the order election has been very important and still hasn't come to an end. So we are really confident of increasing even more our backlog over the next months. Let's move to the summary and the results highlighted for the first half. Total revenues amount to EUR 186 compared to 192 won't happen in the previous half. This decrease is small, but is just minus and a decrease in the development of projects and that we are still on hold because you know that our project include the progress and also the modulation of work. So our business includes some floating high and now also is a fluctuation because even taking into account that the automatic election will be very relevant. EBITDA Has increased, reaching EUR 70.5 million as compared to 15.8 million probably in the previous half is already 11% increase. So that is a very fine month after month. Our margins are increasing and then we will see also a break down in different divisions. EBITDA margin has increased to 9.4%, so plus 120 TPS. So better than the last next half. So that was 8.2%. And the net result really achieved excellent results, thus reaching EUR 6.1 million as compared to EUR 2.2 million in the previous half. So really an excellent result confirming our usual and positive results even above the net results that I mentioned. As far as the financial net financial position, I excluded IFRS marks a 12.5%. So these decreased process is continuing as compared to 13.8 million in December. But if we go back to the first half of 2025, it was 40.4 million . So that's showing a really marked decrease over the last 12 months, but following decrease the process over the last few years. And the last KPI as the various we mentioned. So cut-off debt EUR 56 million compared to EUR 771 million in December. But if we consider also the latest announcement, it goes above EUR 1.1 billion as of today, also including the very last announcement. Let's now move to more details in the revenues. And we would like to highlight these very small decrease in the first half this half can be compared to an extraordinarily robust half that last month in 2 that decrease that is attributable to these engine or some and the euro dollar exchange because we are exposing the dollar currency in our operations, both the bilaterals and partly also in the marine sector. So the breakdown of revenues marks a slight increase in revenues in Europe and this move reduction on the mix in the North America -- as far as the revenues by division are concerned, horizon is EUR 112.7 million as compared to EUR 117 million in the last previous half first half 2025. So this lot decrease depends on some modulation on the project. And it's not a right flag, but it's just an exceptional previous -- and in the other 2 divisions, we see a sort of rebalance that is very important. Lenta reaches EUR 40.3 million as compared to EUR 28.5 million in the previous half. plus 41.3%. And this thanks to the significant volume developed especially in the field of kitchen and the cold areas in the marine sector. we are actually implementing all the projects that we have acquired and announced over the last 1.5 years in Italian and foreign shipatboth in the civil and cooking equipment, which will be impact over the last quarter. So -- and Ms. Teri, on the other hand, has suffered some decrease will be from [indiscernible] EUR 37.8 million. This is a remodulation effect due to the male and interior neighboring projects so there's a shift of strategic shift of the projects because in 2026, we dedicated that set of sites and projects. And we have premolded out of the project and by following the strategy of rebalancing the mix of orders and a focus on the more orders with the higher marginality. Overall, we can see the at varies balance. So that leads to an overall volume well it is aligned to the previous one. As far as EBITDA is concerned, as we've already mentioned, increase of EBITDA margin to 9.4% with an EBITDA at EUR [indiscernible]. And an important contribution comes from the calendar and thanks to its volume, a slight decrease in horizon that was seen also in the revenue and cost it is more on that in line what we like -- so thanks to better in of orders aside some degrees in world orders but the absolute value in terms of margin as connotes confirms that the quality of the projects that we have gave out over the half -- first half. Yes, we can see a sort of comparison between EBITDA margin by depletion. So a slight increase in horizon from 8.7 to 8.1% and the relevant element is that the half of 2025 had a very significant concentration of refitting product, mainly see first of and 26 a year 1 project has been spread to out of the year rather than focusing on the first half. That's why marginality has slightly decreased at the horse in it and sector. EBITDA of the Lenta benefits from a grade volume effect and the efficiency in the old kitchen and the cooking equipment, whereas EBITDA of Merit consistent thanks to a better mix and EBITDA margin exceeded 10% to this mix of order, which is more positive going through an element that also make of the EBITDA, and there are nonrecurring elements, which impact on the net profit and the net financial spend and financial position expenses is decreasing and depending on the financial leverage and the tax effect that is more aligned with the expectation. So with the tax rate, actually is lower than what has been recorded over the last half and the previous half full year. If you see the progression of zones in the first half, and you can see the improvement of net results, it was negative in the first half 2024 2 million, and now it exceeds EUR 6 million in 2026. And then now let's continue talking about the net financial position. And overall, it's EUR 36.1 million, going down as compared to 31st December 25, which was 36.5%. And again excluded IFRS 16 reduced by 9% and going down from [indiscernible] million. And cash generation was more reduced as compared to half last year. And we see seelogical consequence in terms of ounces and orders -- but we recode this is just a temporary effect. And over the whole year and by the end of the year, we would be able to -- we'll be able to produce even more our net financial position. So we expect to have a better effect in the second half as this is typical of every year here over the last years, and this has been the main trend. There's a sort of physiological trend increase in the working capital by the media. And then the breakdown of the financial position, net financial position, again, to show the debt reduction as compared to the first half of 2025 and EUR 61.8 million to EUR 36 million and 56.5% and now 36.1% and through with a leverage, which is equal to 1. So this is the last slide concerning the data, again, once again, the to increased by 24% in June as compared to the December 25 and excluding as of today. So in the right-hand side, on the right-hand side, you see a sort of the expectation that the breakdown by scheduled dear and division -- this is just the first suggestion. Of course, the projects can go faster or can slow down, but this is the expectation of the trend on the P&L and account part of our business, especially the naval part as a very long visibility why the simple part in that includes all of the 3. So glazing and professional cooking equipment and interiors in the retail have a very shorter visibility, which is limited to month. So and share of this backlog, part of this backlog can be seen in the graph, but mainly enable -- in the right-hand side, let a presentation of EUR 956 million and the scheduling of June. So as for figures, this is what I wanted to highlight. And now I leave the floor to our CEO of the company just going through the market trend and the market trend of the cruise ships. Good afternoon to all of you. I just want to highlight that we are actually creating what we anticipated 2 years ago focusing not on the turnover of revenues but mainly on marginality year-on-year, we have reduced our net financial position. We have increased the margins, and we are going back to net profit, as you can see, as you been the first half. So the strategy adopted by the group over the years to develop these 3 divisions enable us to have a vision of, well, rather a certainty of business. So some people sometimes tell me does the crews is a cycle but starting from 1980s up to today. There's always been a growth apart from covid. So 85 ships ordered by 2028 for over $90 billion invested by ship owners. So 84 ships -- on top of the 350 ships same currently sailing. So the part of new building is really having an impact on the backlog. But we're working on the 3 divisions. -- working on the life cycle of a ship, which is 30 years more or less over this 30 gig ship because of reciting to make it competitive as compared to the existing ones -- so we're focusing on what will develop more margins, especially in the part of life cycle of ships. So over the next years, we will have 450 ships that we have to pay to go through repeat. And this is the cruise and neighbor partner. And then another important aspect is the orders of a place to Africa. So we play in a different tankage as compared to the past. And this has led us to acquire very higher works and the orders as compared to the usual web fabric. -- and the backlog that Mr. Micha mentioned, over EUR 1.1 billion in the next months. made this orange to grow in terms of by marginality, but also in terms of revenues. As Daniel stated, we work and buy orders and 3% acute just intake to detail just 3 days work this correlated to last year or minus 2% compared to the previous half. But we have we will be ready to grow in 2027, 2028 and 29 in the 3 divisions. We focused on reducing the net financial position to start with M&A, we are already analyzing them, especially in 2027 with Mystery, and we will start with some M&As.

Okay. We can start now with the M&A session. And so we will start the Q&A session. [Operator Instructions] The first question come the conferences going live from Intermonte.

Good afternoon. I'm sorry, but my camera switch off. I can't make it work. congratulations on your results. And thank you for taking my questions. I've got a couple -- the first 1 concerns Ms. There's been a reshuffle so aligned with the strategy that you already announced. So in terms of better quality. I just want to know could be a proxy on the target that you have on Metier, so margin at this level is a good proxy from now on for the business. And the second question concerns. The Selena business unit. Again, with a consistent robust margin in terms of EBITDA, so double-digit increase that we can consider it as a structural level. And then the mid long-term 2026. It's sort of a reset in terms of mix to a great, better quality of the business. Do you expect that 2027 will be the year from which we will see an increase in volumes and backlog also in the top line. So these are my questions.

We've always stated that the 2 divisions, the so-called start-up material that were set up after carved -- so margins should be above 10%. And it's not midterm in that, but it's the average of the market. And we will continue -- we carried out a few years of reorganization, internal reorganization. And also the naval part of Merill hard to grow again. And it's been a range in order to provide the marginality that we want and that we expect. So the revenue decrease that you've seen is the result along what we have sold 2 years ago. So to reduce in order to have a better marginality and the increase of the backlog that is not over. We will continue to acquire new orders by the end of the year. And this is -- and this allows us to see 27 growing also in terms of revenues. And it's not because we as they decided that. It's because it's bad. Over the next 4 years, there will be a 50% increase, thanks to Fabrica in the U.S. So we have led the foundation to be able to look for marginality, but also to allow us to grow.

[indiscernible] ask the next question.

Good afternoon, everyone. First of all, congratulations for the excellent results. And thank you to question. I've got some very quick questions. The first 1 that concerns the repositioning of the mix of revenues that we have seen -- and I'd like to know thing or what you expect to reach in terms of mix between Horizons, Rica, Mastria Talent, these rising to go down and talent a growing up and Merus behind -- and the second one, the backlog that you showed. So the breakdown over the next years for the backlog. I'd like to know -- what's the situation in terms of production capacity? And how much margin do you have in terms of volumes? And the third one concern the announcement of the last agreement, of which figures were not revealed, but at like to know an average order of fabric. What is the average margin if it's below or above the horizon average margin.

Okay. So I will answer 1 question concerning the reshape and reposition in and revenues in the different divisions. If we have a look at the full year, it will be less significant master should regain a more way as compared to the first half. So yes, there will be some reshape repositioning, but it will be a little bit smaller. -- because it's just a temporary effect of the first half and the first half of 2025 had. So a large part of marine interior not reflected on the second half. So there will be, but just smaller, there will be an increase, but smaller as compared to the variation that we saw in the semester. In terms of the production capacity. So for bullet, all of our companies are production company, both here and in the U.S. This has allowed us to bypass some geopolitical situation issues that we have experienced. We have shift 1 shift in some companies we have room for improvement and to get to 2 shifts with low with a little investment that in order to increase our revenues, our investments are not so high. So in the first half, you we will consolidate our design activity. So we joined as a minority in a design studio, a design firm that sums up to other firms to take the necessary hours or the necessary time that we need to develop and design important projects. But we could be growing by 50% with small changes in our investments. And maybe margins for Horizon, the are, of course, it depends on the projects and by the volume, it depends on the volume but it's aligned with the average horizon volume which -- this historical and typical of the facade word. It's not important just for the -- the part of Martha is growing, but it's the result of synergies that we carry out between the external world. You've seen a picture of these iconic building. And let's think of a building designed by foster and Normanster, how many correct and technical details can be envisaged. It's something that we've already carved out with the Rolex building, and that has increased by 50% already. So we expect -- so margin, that is unaligned with ones of Horizon. And let's bear in mind that in the horizon world, we also include the refit part, and we're a leader in the naval part and which also provides us a higher super margins. Yes, some follow-up on this last point, refit First half 2026, Brexit was a little bit lower than first half of 2025. If we can know how much the impact was in the percentage in the first half. So refer concerns horizon and last year was more focused on the first half. And this year is on the second half it depends on how the ship owner decides when to stop the shapes and when to go on the dry dock. Sorry, Alecio, this is -- I mean we cannot disclose specific information about this. One third less as compared to the first half of last year. Another important aspect is that -- we have arranged our branch in Miami and equipped it also with Talent stuff. So someone in charge with refit for talent. And in 2025, we almost that didn't have important work in this period, whereas a of naval sector in Valenta is given by refit and this is also growing.

Next question, Filippo Mazzoleni from Alantra.

Hello, good afternoon, the congratulations on your results. I have 3 questions. So order intake, I would say that the first half exceeded the expectations of a consensus for the last 3 months, do you expect a similar trend or some slowdown as compared to the first one? Or do you expect an acceleration or an acceleration or speed up of the top line.