TREVI - Finanziaria Industriale S.p.A. (TV92.F) Earnings Call Transcript & Summary

Good morning. This is the Chorus Call conference operator. Welcome, and thank you for joining the TREVI Full Year 2024 Results and Business Plan Update Conference Call. [Operator Instructions] Today's conference is hosted by Mr. Giuseppe Caselli, CEO; and Mr. Vincenzo Auciello, CFO. At this time, I would like to turn the conference over to Mr. Giuseppe Caselli. Please go ahead, sir.

Thank you very much. Good morning, ladies and gentlemen. Thanks for participating to our conference call of 2024 results and business plan update. Well, I believe that the majority of the people, I believe all of you know what is TREVI, our business, our line of business, and what we are doing. Just going straight to the 2024 results that I believe is the main issue that we are all gathering together today and having the pleasure of your presence. In terms of economic performance, our group revenue stood at EUR 663 million, plus 11.5% compared with 2024. And this confirms our strong commitment in maintaining what we have presented to the economic community three years ago with a steady growth during the three years that just passed. In terms of EBITDA, we reached EUR 83.6 million, plus 12.2% compared to the 2024 EBITDA margin result. In terms of backlog and new orders, the order intake of 2024 at December was at EUR 605.4 million, and the backlog reached EUR 700 million -- EUR 701 million. And this is in line with what we had at December 2023 that was at that time EUR 721 million. In terms of financial position, our net debt at December 2024 was EUR 199 million, EUR 198.9 million, minus EUR 3.1 million compared to the previous year. The free cash flow from operation is positive at EUR 32.5 million. The leverage ratio is at 2.38x in 2024 -- end of 2024. In terms of business plan, what we are envisaging a continuous growth even in the next year to come. Of course, focusing and having a selecting approach on those projects since we want to try to maintain as much as we can the positive trend that we had in the last year. And of course, the most important element is that we are fully committed to reduce our net financial position along the plan. In terms of outlook, how the 2025 look like because as we -- as all we know, 2024 has gone, although even if the results are positive, we are already in 2025, and we are working in delivering 2025. And we believe that will be the outlook, the performance result in line with the company current evolution. In terms of guidance, we are envisaging as of today, revenues in the range of EUR 670 million, EUR 690 million and recurring EBITDA in the range of EUR 80 million, EUR 90 million. The net debt to further improve between -- in the range of EUR 190 million to EUR 194 million. In the next slide, we wanted to present our evolution in the past three years. We didn't want to go back before 2022, but if you go to our record, you can see there is a continuous growth. And comparing 2022, 2023, 2024, in terms of revenue, we have an increase of 11.5% 2024-2023. In terms of EBITDA, we moved from EUR 64.5 million to EUR 83 million with plus 12.2% 2023-2024. In the total adjusted net profit and loss, we moved from a minus EUR 5.7 million to plus EUR 15.6 million. Free cash flow from EUR 13.3 million to EUR 32.5 million. Net debt from 2024 that the result speaks by themselves. There is not much to comment on those apart the fact that we have started in 2020 how difficult restart of bringing company to what it was to a new company, and we are along the way and these results prove again that we are in a current positive trend to achieve what everybody is expecting to achieve. What are the main projects that we were working, operating in 2024 and the beginning of '25? Definitely, we have -- as you can see from the presentation, we are ranging from Australia to Emirates to [indiscernible] to U.S. to Philippines, to Algeria, to Argentina, and last but not least, Saudi Arabia. Projects that is flag one is NEOM that is keep on going to New York, Washington -- New North Washington Street Bridge, Hail & Ghasha in the Emirates, Metro Manila in Philippines, the Baraki Metro and Railway Station in Algeria, and others. Italy has been an important block of activities in 2024, thanks to the PNRR. Currently, we are working on the Florence High-Speed Rail Link. We have started to work on the Garisenda Tower to try to secure the Garisenda Tower. Then we have started with the continuing building of the Malagrotta Landfill in Rome, Messina-Catania Railway, New Piazza Venezia Rome of metro station Line C. I believe that all those that have the pleasure to go to Rome see our equipment and our silos just in Italy [indiscernible], unfortunately, Piazza Venezia and IFA port terminal in Ravenna. At Slide #8, you can see the evolution quarterly by quarterly of the order intake. Just going straight on 2023, we had an order intake of EUR 741 million in 2024, EUR 605 million -- as everybody know, the order intake is a one-off event. So a project that enter in a month rather than another can move the order intakes in a year quite sensibly. But anyhow, we consider that the 2 order intakes are quite comparable. In terms of -- and this is further proven by the backlog evolution in the last 2 years, where you can easily see that in 2024, our backlog reached EUR 700 million that is almost in line with the backlog that was in 2023. How much is of this backlog since we are talking -- we are already working on 2025, and we are concentrated on 2025 expectation results. As of today, we are considering that almost between 75% and 80% of the backlog will be converted in revenue unless extraordinary situation may happen during the year. And this give again a positive sign of what the 2025 -- we could expect on 2025. Now I will leave the floor to our CFO, Vincenzo Auciello, for presenting the numerical part of our results.

Thank you. Thank you, [ JG ], and thanks, everyone, for joining the call today. Let's start from Slide #10, which presents a financial summary for the full year 2024 compared to 2023. As you can see from the right-hand side of the slide, our free cash flow from operation was positive for EUR 32.5 million, net of EUR 27 million of CapEx investment. We see it as a remarkable result that shows how we turn growth of margin into cash generation. Moving leftwards, our adjusted net result was EUR 15.6 million with an improvement of EUR 4 million compared to last year bottom line. And we refer to adjusted net profit because 2023 net result was boosted by the positive effect of successful completion of financial restructuring completed in 2023. And I'm mainly referring to the effect of IFRS 9 on the debt, which then will be divested pro quota until the end of 2027. And the difference of EUR 10.1 million between the adjusted and the reported net result you see in the chart is exactly the portion absorbed in the year 2024. Recurring EBITDA grew by 12% year-on-year to EUR 83.6 million with a slight EBITDA margin increasing from 12.5% to 12.6%. I would also like to point out that in 2024, the EBITDA reported is almost in line with the recurring because the extraordinary costs amount only to EUR 1.8 million. Then focusing on revenues on the chart on the left-hand side, there is an increase of 11% year-on-year on the revenues, primarily driven by our credit division. Moving on to Slide 11, we see our revenue footprint. This shows a well-diversified geography of our revenues, allowing us to be well-positioned in many markets and being able to capture commercial opportunities that will arise. Let's go now through our division's results, and I start from -- I start with the TREVI division, so Slide #12. TREVI division reported EUR 537.5 million in revenues, which increased by 15% compared to previous year with a stable backlog. And the revenue growth has been particularly robust in the second half 2024 versus the previous half. Indeed, in the second half of 2024, we have accounted EUR 330 million revenues, led by higher volumes in Middle East and Italy, thanks to the starting and progress acceleration of some projects awarded in 2023 or in the first half of 2024, which have more than compensated lower volumes in North America and Africa. The recurring EBITDA was at EUR 73.5 million, up to 5% compared to 2023, supported by higher revenue. So we can see, I would say, that these metrics, this improvement has also boosted, has also contributed to the improvement of the overall group results, both in terms of economics and cash flow generation. Moving on to Soilmec division at Slide 13. You can see revenues down by 5%, 4.7% year-on-year, while recurring EBITDA increased both in absolute value and in percentage of revenues. Soilmec's improvement in profitability is related to the pricing adjustment and reduced procurement costs, along with an optimized performance operation, favored by the operational strategy of making in-house rather than buy outside. Let's now have a look at the overall P&L on Slide 14. We have already commented on revenue and EBITDA, so I would like to point out some items below the EBITDA. Depreciation is almost aligned with last year's figures. While above the provision, the amount accounted in 2023 benefited from a positive component coming from the release of nonrecurring provisions for about EUR 7 million. And such release justified the difference with 2024. Moving below the EBIT, I think it is worth spending a few words on the financial expense result. In 2023, we have accounted financial income deriving from the completion of the financial restructuring. So in 2023, there were almost EUR 15 million of financial gain linked to the actualization of the restructured debt in compliance with IFRS 9. Differently, in 2022 figures, no positive effect from the restructuring of the debt are accounted. And moreover, in compliance with IFRS 9, there are EUR 10.1 million included in financial expenses as a quarter reversal of the positive effect accounted in 2023. And plus, we have financial interest matured on the debt. Finally, income tax amounted to EUR 7.8 million, EUR 2.7 million lower than 2023, thanks to the positive effect stemmed from a change in the Italian fiscal law. Let's now move on the slide that talks about the generation of cash. Let me say that the generation of cash should be a kind of obsession in our -- for our group. Looking at Slide 15, at the end of 2024, we had a positive outcome in terms of operating cash flow that stood at almost EUR 60 million with an EBITDA cash conversion of 70% and free cash flow amounting to EUR 32.5 million. This, I would say, was made possible, thanks to the strong operational results as we see the recurring EBITDA was EUR 83.6 million. Then such strong operational result along with the improved and efficient working capital management because we see that we had an improvement of working capital as difference between trade receivables, trade payables, and advances. So there is an improvement of EUR 10 million. So the strong operational results, along with the efficient working capital management, we were able to free up cash to cover our CapEx for almost EUR 27 million and to pay, as we will see in the next slide, also our debt obligation. Moving on to Slide 16, you see the evolution of our net debt structure. At the end of 2024, we had a net debt position of EUR 221 million before IFRS 9 adjustment with an improvement of EUR 13.2 million versus the beginning of 2024. Of course, this result has been possible, thanks to the free cash flow generation of EUR 32.5 million and such cash generation was able to cover also cash out for payment of interest on debt and dividends to minority for a total amount of EUR 14.8 million. So all in all, the EUR 13.2 million improvement between 2023 and 2024 allowed to reduce the net debt position to EUR 221 million. Adding up the residual effect of IFRS 9, the reported net debt stood at EUR 199 million, so under the EUR 200 million. Let's now have a look at the liquidity and debt structure at the end of 2024. We are on Page 17 of the presentation. Overall, in 2024, we have increased our cash liquidity of roughly EUR 15 million. Our gross debt, so gross debt stood at EUR 311 million, higher of around EUR 11 million versus the 2023. A more detailed overview is provided on the right-hand side of the slide, and the increase is due to the effect of IFRS 9 plus the interest peak mature on the debt as per our financial restructuring agreement, minus the debt repaid during the year. Coming back on analyzing the net debt. So if we deduct the cash and liquidity and the other current financial assets from the gross debt, all in all, the final net debt in 2024 stood at EUR 199 million. Our leverage ratio as net debt on recurring EBITDA landed at 2.38 showing our continuous effort in deleveraging our balance sheet over 2024. Just for the info of the audience, as per financial restructuring agreement with the bank, such ratio in 2024 was set at 3.25. Being our final ratio 2.38, that means that we largely met the covenant. Let me now hand back to [ JG ] for our business plan update and closing remarks.

Well, thank you very much, Vincenzo. Thank you very much for your explanation. It was concise and precise. Well, as you know, we are shifting from -- we are in the process, and we are shifting from the restructuring process to a phase of growth and value creation. What are the main pillars that we are building on our business plan for the next years to come? Well, definitely, we want to keep on growing in terms of revenues, but we want to keep on growing with an extremely selective approach. We are seeing that around the world are coming out different opportunities due to a boost that the various government in the various area want to give to the infrastructure activities. And there are business to be pursued. At the same time, we don't want to end up in a situation where this type of activities will become a [indiscernible] to our result. So we want to increase volumes, but at the same time, we want to improve in terms of profitability by being more selective in the various business opportunities that we have around the world. In Soilmec, what do we have to do? Finally, after a long process that lasted -- that is keep on going, but definitely the majority has been done, we were able to completely rethink the way of assembling our equipment. Now we have a process that has improved in terms of KPI, in terms of efficiency. And we are now focusing on the commercial activities around the world. Since last year, we have seen that the market was not so as it should be. It's a market that is affecting not just equipment of Soilmec, but equipment of our peers as well as many other areas of the business in terms of manufacturing. Of course, it's worthwhile to repeat more and more that we have to improve in our working capital management in order to continue deleverage our financial situation. And last but not least, we are aiming and striving for a sustainable business growth. What are the figures that we are looking at in the next 4 years? As we know, 2024 as presented by Vincenzo, the revenues stood at EUR 663 million in terms of Group. In 2024, we are looking in a range between EUR 670 million, EUR 690 million. And in 2028, we were looking revenues above EUR 730 million. This, again, we want to grow, but we want to grow maintaining our level of profitability that if you compare to our international peers is already at a reasonable level. So in order to not lose in terms of profitability, we have to be selective. And this is the reason of our forecast in terms of revenue. In terms of recurring EBITDA from the EUR 83 million, EUR 83.6 million of 2024, we again will be looking at in the range of EUR 80 million, EUR 90 million to reach above EUR 100 million in 2028 with an increased percentage of 8%. In terms of free cash flow from EUR 32 million to a cumulative '25, '28 of about EUR 150 million. Net debt from the current -- December net debt position of EUR 199 million to below [ EUR 140 million ], so minus [ EUR 50 million ] in the next 4 years. In terms of leverage ratio from the current 2038 (sic) [ 2028 ] to go around 1.4. So these are the key elements in which we have built our business plan. Our business plan, I would like to mention that has been built not from an approach top-down from our usual approach since I was involved in this company in 2020, bottom-up. So we are building from the bottom rising to the top. We don't do numbers to please the market or to please the situation. We build up numbers on what we believe can be done and what we are seeing, effectively seeing in our future. And this is the reason that if you go back even before 2022, that is the slide that we presented in the beginning, we always maintained what we have said in terms of guidance. We were steady and maintaining our guidance. This is the reason why we will not change our approach. And I believe that in this business, the only real approach, the only correct approach, the only sustainable approach is a bottom-up approach. Regarding the 2 divisions, as you can see, trading that is current at EUR 537 million will go above the 2025, we are foreseeing in the range of EUR 525 million to EUR 540 million. 2024 was a very strong year for trading, especially the third quarter. Those that have participated in the Far East conference call and we met in our roadshow in the first semester was low, but I was mentioning that the second semester will be stronger than the previous year's semester. Fortunately, due to the capability that we have to do to organize works and to be able to deliver results in the third quarter, we have outperformed. And this is the reason that is of the good result of 2024. In terms of EBITDA, we are moving from EUR 73.5 million that is the current EBITDA to a range of EUR 70 million, EUR 80 million of 2028, our effort, our target, our aim is to be above EUR 80 million. Of course, the EBITDA in terms of absolute amount and the percentage is driven by the market, depending on which market you have opportunities and in which market you want to operate. Please, you have to remember that 2024, the Italy market grew up almost from the initial EUR 50 million, EUR 60 million to EUR 90 million. So a tremendous increase. And the Italian market has a lower EBITDA compared to other part of the world. Soilmec, 2024, we reached EUR 145 million. We are striving in 2025 to reach EUR 150 million, EUR 160 million and in 2028 to be above EUR 170 million with an increase of a compound annual growth rate of 4%. In terms of EBITDA, that is the elements that give more confidence from the past year to today, we have EUR 13.2 million with our range in 2025, we foresee between EUR 13 million to EUR 16 million, and 2028, EUR 20 million. The growth will be basically driven by the fact that we are putting on the market new equipment with new type of equipment, equipment that will fit the market better than those that we have produced so far. And we strongly believe that this will be appreciated by the market in terms of performance, in terms of logistics, in terms of efficiency, in terms of pollution with reduced footprint pollution. If you go to the next slide, although it's quite populated, there are a lot of projects that are mentioned. Briefly, we can say that we are extremely focused on North America, that in 2024 was not performing as everybody was expected due to various reasons. But currently now, we have seen that by the end of the year after the presidential election, there was a blooming of tender that was flooded in the market. And of course, in this situation, we have to be careful to try to be selective after a period of stagnant opportunity to pick one of those that are more effective for our policy in terms of improving our EBITDA margin at the same time to improve our revenue stream. We just mentioned some from Potomac to Palisades to Minntac to Nuclear. In terms of South America that stands at only 4% of our worldwide revenues, so quite marginal compared to the other country. The reason is why because before in the past years, 5 years ago, we were trying to take whatever was provided in the market in the different country of South America. And of course, with having small jobs around South America at the end of the day, the result was negative. Now we are concentrated on what we call special projects, those projects that have a certain type of profile in terms of expected margin. We are going to projects that are complex. So not all can participate and draw down the level of profitability. And this is the reason that it stands at 4%. We are currently working in oil tanking project in Argentina. As we can see from the presentation, we are concentrated in Argentina as of today because this is the only place where this type of projects are available. Europe, we are concentrated again on the PNRR in Italy. Then we are trying to secure a project in [indiscernible] in Albania with the port, and we just started our operation in the Spanish market. Last year, I was mentioning to you financial community that we were trying to enter in Spain. We got a contract for the Barcelona Metro line, and we will start operation in the next month within the first semester. In the Middle East that is a share of 44% of our portfolio. Of course, NEOM, just to mention the one that in the recent year has been quite constant in our revenue stream. Then we have an incredible number of projects in UAE that is literally blooming in terms of opportunities. Then we will be trying to be involved in the railway between UAE and Oman. It's a project that is on the shelf since quite a while. But currently, it seems to be that it is becoming a reality. Then we have different projects in Kuwait, where we are operating since many years. Africa, we have the same approach as South America with slight difference. For instance, in Algeria, we will be involved in the construction of one station in the Metro [ Algiers ], the new section that will start soon in the next months, I can say weeks. And nevertheless, we will be looking for special projects where we can have an added value. As you know, we are working in Nigeria since more than 50 years. We will keep on remaining in Nigeria. But we will be concentrated on those projects that we believe can have results in line with our own expectations. Then we are trying to see an opportunity in Senegal, it's a dam. So activities that are pertinent to our core activities, not activities just for doing something. We are concentrated in those core activities that, a, have a technological barrier entry; b, are expected to be profitable; three, that are complex projects because only if we have this type of approach, we can have the results that we can expect. We are not looking for revenues. We are looking to profitability and conversion EBITDA to cash. Then the metro station in Egypt. Asia Pacific stands at 11%. And again, Philippines, where we have a track record, historical track record quite important in the past, but nevertheless, Australia. And finally, New Zealand. New Zealand, where we had a kickoff projects -- kickoff meeting a couple of weeks ago, where we are involved since quite a while in alliance with the client. Where we are reentering after so many years in a very complex activities and project that is the Arapuni Dam Phase 2. So what I can say in brief that we can see right now that since USA start physically to have a number of activities, not only in the tendering phase, but with my recent visit in the States, they are saying in the market [indiscernible] really to flow, we expect to increase our share in the American market and as well in other parts of the world. For instance, we are trying to see an opportunity in Mexico that is not mentioned in the slide, but we are really pursuing other countries where we can be of a certain value to the client, and in return, we can receive a certain value in profitabilities and revenues. So in terms of commercial opportunities, we see a real robust and stable commercial opportunity in the midterms. Going to Soilmec, as you know, the majority of our market is on the piling rigs, 71% of our sales are on the piling rigs. Then cranes & hydromills, 12%. Microdrilling, more or less the same percentage and services, and the remaining is the remaining 6%. And what I can say is that as you know, to work on a model that can be attractive to the market and can be really a game changer in our level of revenues and sales, it takes time. So now we are, for instance, working and we have started already to produce and sell, for instance, hydromills that are extremely compact and can be used either with a traditional endothermic motor or full electrics. And that is currently sold and start to operate in France and that is very compact or flexible, can be compact, not compact at the same time. We spent quite a number of resources and hours in order to develop that. Notwithstanding that, we have invested in the piling rigs, so producing equipment of the new line Blue Tech that are extremely more efficient, less fuel consumption, more friendly to the environment. And we believe that those equipments will have something to say on the market. Last but not least, we have rejuvenating completely changing the [ micro-piling ] design and production that will be on stream by 2026. So basically, the Soilmec trend that started 5 years ago, first was fixed in terms of rationalizing the production site, then changing the way of producing from island mode to in online, then improving dramatically the efficiency of the production together with streamlining our sourcing activities for the components of the rigs. At the same time, we started the process of reengineering the majority of those equipment that has a high value in terms of returns. And now we have started the real production and the sales of those equipment. As I was mentioning, hydromills that has a new concept that has been already sold on the market, new piling rigs that have an important impact of our revenue. Two of those, for instance, will be sold in the American market already in 2025 plus other to come. And now last but not least, the engineering of the micro part is ongoing, and it will start to be sold on the market by early next year. So in terms of closing the market, what I have to say more, I have to say that 2024, we have quite good results. The numbers speak for themselves. There is not too much to say about to say. It had three consecutive years of full delivery in operating results in line with our business plan. There is a positive cash flow generation. And finally, now we are looking with more and more convinced and positive outlook for next year to come unless something extraordinary will happen. But unfortunately, this will be out with our control. So thank you very much for the time that you spend to listen from what we are saying. And we are, of course, aiming and willing to answer to any of your questions.

[Operator Instructions] The first question is from Emanuele Galazzi, Equita.

I have, let's say, three questions. Well, the first one is on the Saudi as basically the Middle East reached 40% of your revenues. Can you just comment a little bit more about the trend in that area? Are activities going now at full speed at NEOM? And do you have, let's say, visibility or do you expect an acceleration of orders in the short term from Saudi? The second one is on Italy. Clearly, a very strong performance in 2024, I believe, due to the [ NRP ] project. I just try to understand if you see Italy as a stabilizing market going forward or if you see, let's say, still interesting commercial opportunities for the Italian market. And the last one is, can you just provide a guidance on the order intake for 2025 and on the net financial charges? Should they be close to EUR 20 million, so basically in line with 2024 or, let's say, slightly lower or lower? Should they be close to EUR 20 million, so basically in line with 2024 or, let's say, slightly lower or lower?

Well, thank you very much. I will try to give you as much as information I can at the best of my knowledge today. The first question was relevant to Saudi Arabia, okay, and Middle East in general. Now as I was trying to say before, maybe I was not so clear, at the current point in time, Middle East is really booming of activities. And when I say booming is the Emirates are investing a lot of money in -- not just in construction, but also big complex. So in the Middle East, currently, the situation is quite interesting. In terms of Saudi Arabia, NEOM, as you know, we had the intuition to be there when nobody knew what was NEOM. And we moved equipment in the middle of nowhere and we were the one that did the first pile for starting this incredible adventure so far. So we were believing in that despite the fact that there was a lot of capitalism and many, many didn't know what NEOM was not even the area where it was. Now of course, NEOM, as you read on the press, has been a lot of rethinking on NEOM on the line where we are currently working. Now definitely a part of the 2.4 kilometer of the line will be built. We are in the -- currently doing the work order #6 of -- that has been awarded to us. In the beginning, there were many companies, many companies arrived at NEOM like because they were believing that was in El Dorado. Then for a reason or another that is not -- it's out with our control, there was a sort of rethinking of the project, we remain there. I was there constantly in contact with the people in NEOM, and I'm going there next week just again, because we were believing that this project was moving ahead. And as you know, in one of the block, the 2.4 kilometer, one of the stadium for the World Cup has been presented in one of the block. So one of the stadium that the International Football Association will choose is one of those that will be built in one of these buildings. So this is the reason why we strongly believe that this project will continue. Of course, it cannot continue forever and not at the pace that, for instance, was at the end of 2024, but will be an element that we count on. Then Oman. Oman has been for us a continuous amount of works year-by-year, nothing extraordinary but constant and the same as Kuwait. So we are ready to take opportunities in the Middle East wherever that will happen. As you know, in the Middle East, there is a major, major project that will be as the press sale, so awarded by the end of the year or early next year, that is the high-speed train between Dubai and Abu Dhabi. And of course, we hope to be able to participate to this opportunity somehow give you another element of value of how the market situation in that area is going. Then regarding Italy. Italy, I see a commercial opportunity. Now thanks to the PNRR, a lot of activities are moving ahead. And we are, again, trying to see we are currently at more or less EUR 90 million per annum in 2024, correct me if I'm wrong, in terms of revenues in Italy. And if you go back just a few years back, we were at EUR 20 million, EUR 25 million. So we increased the 4x our revenue stream in Italy. This, of course, it goes together with an increase of equipment resources and the like. Since Italy is very fluctuating, we were very, very careful to invest money in a market that today is and tomorrow is not anymore. But this we did in a very sustainable manner so far. I believe that we hope that this market will stay stable for 2025. 2026 I have certain doubt. So this is the reason why we are working on many other opportunities around the world in different places like Mexico, for instance, in order to have markets that can balance what we are going to have less in different countries like Italy or Saudi or where we have a lot of activities [ that will alternate ]. In terms of order intake, I believe that we will be in the range of order intake for this year plus 5% to 10% because our order intake is an extremely positive sign on one side. On the other side, I want to be at the pace of doing works because I don't want to have an order intake that is aged because when you get a contract, you get a contract a certain price. And due to the evolution of the situation around the world, you don't know how the price of what you need in terms of material, for instance, or equipment you have to use. So I don't want to have an aged order intake or aged backlog. I want to take contract. At the same time, I want to use to materialize this contract in revenues. And this is the reason that we don't want to have an excess of backlog. We don't want to risk. We don't want to gamble with cost of material that may increase, cost of equipment that may increase, or any type of situation that can put at risk our expected profitability. So it's a kind of answer. Whatever we get, we want to transform in revenues. Then I leave the floor to Vincenzo for the net financial position.

Okay, Emanuele. So I think your question was about the financial charges in 2025.

Correct.

So in the financial charges in 2025, there is a component in line with 2024, and this is a nonmonetary component coming from the IFRS 9 quarter. EUR 10 million was the quarter of 2024. In 2025, we will have the same quarter. However, we see in reduction the component of financial interest on the debt because if we also have a look to what is the forward evaluation of the interest rate, we see it down compared to 2023. So we are expecting lower interest rate versus 2024 overall with one component that is in line in 2024, IFRS 9, while the interest charges on the debt on our, let's say, short-term facility in reduction.

The next question is from [indiscernible] from Kepler.

A couple of questions about your balance sheet. Particularly in the working capital, we see pretty big changes. Particularly, we see the work in progress that were significantly on the rise in both in absolute and in relative terms. If you could explain in detail why this item is increasing that way. And also, we see a strong improvement in the DSO. So apparently shorter cash-in times. Is there a sustainable level? Because looking at your recent history, it's strongly below. So is this a one-off item or something that can be replicated going forward? And very last question about the minorities on the net income, if we can expect this amount or this share of minorities to be again there in the next years.

Okay. I'll get the question. So thank you, [indiscernible]. I'll start from the very last one about the minorities. So the reported net result is EUR 5.5 million in 2024. The post minority is EUR 1.5 million. So the difference is EUR 4 million and is mainly attributed to the performance in 2 countries, Nigeria and Australia. I will say that considering also our business plan, our footprint, our opportunity along the world, maybe we will have more or less the same level of attribution to minority. We see Nigeria in line a bit reduced compared to 2024. We see Australia in line. So I think we may have the same level of attribution to minority in 2025 and along the plan because Australia anyway plays an important role in our business plan. So while talking about -- I think you have mentioned the work in progress and also our reduction in trade receivables. Exactly, we had a reduction in our DSO because from 98 days, we went down to 78 days. And we see it and this is coming from, let's say, a trend reduction in the last 2 years. And 78 days, of course, I think it's more physiological for our business to generate cash. We are strongly focused to keep at least this level. We will work to have even a better ratio. However, 78 days is, of course, a remarkable result, and we start from this. While about the work in progress, let's say, let me elaborate a little bit about the work in progress. For our business and above all, for TREVI division, work in progress are normal component of our working capital. And let's say, the increase we had in the -- at the end of 2024 in work in progress is due to the growth we had in the year, thanks to the starting of projects acquired in 2024. So work in progress can be considered as a healthy component of our working capital as long as the work in progress is driven by the acceleration of progress in our project. In this case, it can be considered as a healthy component of our business, and we are exactly in this case because as you can see in the balance sheet, the work in progress at the end of 2024 were about -- increase of about EUR 60 million. It is exactly due to the acceleration of progress we had in the second half 2024 and above all in the last few months of the year. And because work in progress are mainly revenue earned in the last part of the year were not invoiced, but have been invoiced at the very beginning of 2025. We are, in this case, so that's why we think that it's even a healthy component because it shows how we have accelerated in our progress. While work in progress is not a healthy component if it includes a massive amount of pending revenue and dispute revenue, but it's not our case. So I hope this replied your question.

Yes. And if I may add another one about the target to 2028. If I'm not mistaken, you mentioned a target of less than EUR 140 million in net debt by 2028. If I'm not mistaken, the previous plan was pointing to around EUR 130 million by 2027. So we can assume it's a little bit more conservative view on the deleveraging over the time frame of the plan.

Is considering the new plan, but it's also considering we want to be a bit conservative because there are many components building the plan. There are commercial components, there are evolution of our revenue and EBITDA. We think that in 2028, we can go lower than EUR 140 million as in the revision of the plan, we get a bit more conservative. But if we look at the accumulated free cash flow of about EUR 150 million during the plan, along the plan, we are confident that the new target lower than EUR 140 million that is a kind of conversion towards what was already published in the last year in 2027 is healthy, is robust and is in line with what we expect also from an economical standpoint.

[Operator Instructions] Mr. Caselli, there are no more questions registered at this time. I turn the conference back to you for any closing remarks.

So thank you very much indeed. Thank you very much for the time that you spend with us. I hope that we have been exhaustive. Always, we are here to answer questions whenever you would like to talk to us, and we look forward to bring positive results also in 2025. Thank you very much indeed.

Thank you.

Ladies and gentlemen, thank you for joining. The conference is now over, and you may disconnect your telephones.