Wiit S.p.A. (WIIT) Earnings Call Transcript & Summary

Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Wiit First Quarter '26 Results Presentation. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Alessandro Cozzi, CEO of Wiit. Please go ahead, sir.

Thanks. Good afternoon, everybody, and thanks for joining this conference call. This morning, the Board of Directors Wiit approved the results of Q1 2026. You can follow the presentation I sent. And at the end of the presentation, there is a Q&A session when you can make questions about figures and general overview of the company. We can start with Page #3, highlights. Revenue stable growth a little bit was EUR 41.4 million. And the most important for us is the recurring part of the revenue was EUR 34.4 million, plus 1%, and there is 90.9% of the total revenue. That means for us high visibility and predictably in terms of revenue. Thanks to the scalability of the business, the EBITDA growth more proportion of the revenue. EBITDA was EUR 17.2 million, EBITDA plus 9% compared to EUR 15.8 million previous year. EBITDA margin was 41.6% compared to 38%, plus 320 basis points in 1 year without -- in this year, we don't have an M&A effect. It's more organically. EBIT consequence growth faster, EUR 9.4 million, 21% of the revenue compared to EUR 7.8 million and the margin was 22.7% compared to 18. 9% big incremental in terms of profitability, thanks to the economies of scale and the utilization of our assets. Net profit remained stable, EUR 4.1 million, mainly impacted from more interest expense related to the bond issued last year. Net debt adjusted is EUR 137 million compared to EUR 156 million. In the adjusted EBITDA, there is a market value of the treasury share at the end of March '26 and there is not including the IFRS16 effect for the leases. Go to the Page 4, breakdown in terms of countries. Italy performing very, very well growth in terms of revenue EUR 15.4 million and in terms of EBITDA, mainly recurring, EUR 14.4 million recurring. And EBITDA was EUR 8.4 million, 54.2% of the revenue compared to 48.9%. EBIT in Italy, very impressive growth, EUR 4.2 million, 27% of the revenue compared to 18.8%. Germany, we know in Germany, we have one transition year, let me say, for the effect of the churn we noticed in the market last year, but we fully compensate the churn with the new booking. The revenue remained stable. ARR was EUR 16.6 million and 94% of the revenue excluded the Gecko, the consulting company. EBITDA stable, EUR 8.1 million, 37% of EBITDA margin, a little higher compared to last year, whatever we have -- despite we have the churn during the period. And EBIT was in line with last year, EUR 4.9 million, 2.8% EBIT margin. Switzerland, this is a good news. The turnaround is hand, and we start to see a little more in the green way the performance of the company. Naturally, we suffer a little bit the size. But despite the size, the performance started to be more profitable. Revenue is stable. Revenue on recurring was EUR 3.4 million, in line with last year, but EBITDA was EUR 700,000, 18% EBITDA margin. I need to remember that when we bought this company was turn around with a negative EBITDA. The first year, we achieved just a breakeven point in terms of EBITDA. And now we are entering in the second year inside Auto Group and the EBITDA has improved a lot, 80% starting from 0 from our point of view is a very, very good result. EBIT, the same recovery is 7% of the revenue. So that means that total group level, we achieved EUR 41.4 million revenue, EUR 34 million recurring revenue, 90% of the total revenue. EBITDA was EUR 17.2 million, EUR 51.6 million EBITDA margin and EUR 9.4 million EBIT, EUR 22.7 million. In our view, the EBITDA margin will be improved again in the next following quarters, thanks to the scale and the reduction of amortizing for the less CapEx. I jump now to the breakdown. I can go directly to the EBITDA, Page #6. You can show Italy and Germany and Swiss anticipate Germany was stable in terms of EBITDA profitable, EUR 8.1 million, big improvement in Italy from EUR 7 million to EUR 8.4 million, thanks to the efficiency inside the group, consolidation and utilization of the services and the reduction of the amortizing. Go to the EBIT margin, the Page #7. EBIT is stable in Germany, EUR 5 million, EUR 4.9 million very, very few difference in terms of EBIT, but strong, strong improvement in Italy from EUR 2.7 million to EUR 4.1 million from 18% to 27%. Our target is in the midterm target to achieve 29% of EBIT margin and Italy is just in the current way. Now we are working in Germany to recover the EBIT margin, but we are sure in the correct way to achieve this target. CapEx, Page #8. It's knock more sense to analyze the single quarter because we did CapEx depends -- not all the quarters we have the same CapEx. In this case, we have less CapEx than compared to last year, but we spent totally EUR 7.5 million, EUR 4.2 million was cash CapEx, EUR 2.1 million maintenance -- Italian and EUR 2.1 million of growth CapEx. Correct. Okay. In general, we estimate -- we confirm that we estimate at the end of this year to spend EUR 24 million, EUR 25 million of totally cash CapEx. We remain in line with the guidelines. Bridge on net debt, Page 9, main impact of the treasury share buyback. In the first quarter, we were aggressive in terms of buyback. We bought roughly 19 million of shares because the price was low and was a good deal for the company to make this buyback during the first quarter. Currently, the company own roughly 12% of the own share, and this was our target declared last year. General cash flow was strongly, EBITDA EUR 70 million, CapEx EUR 4 million. Interest a little higher for the interest of a new bond and this is a point. Net debt, Page #10. The leverage remains strategic for Wiit. In this chart, you can see that net leverage at the end of March was 2.3x and there is properly low if you analyze our covenants currently in our bond. We have 4x this ratio to maintain. And currently, we have paid 2.3x. So we have cash and we have more capacity in terms of leverage to finance M&A. M&A remain -- no remain come back now very, very important. We are in 2 dossier at the same time in open due diligence. And now we are working to expand our perimeter. The main zone we are looking are naturally back zone, Germany, where we are one target -- sizable target, let me say. And we are starting to talk to open a new country with a small deal. So currently, the company is very, very committed to find a target to buy in the next quarters. We are ready for the Q&A.

[Operator Instructions] The first question is from Giorgio Tavolini of Intermonte.

Regarding the firepower for M&A, you said in your recent interview that you have EUR 300 million firepower for M&A. So I was wondering if you have a specific timeline given that you have these 2 dossier under due diligence, so one in the dark zone and the other one in a new country. And the second one is how should the CapEx guidance change in the event of the sale leaseback in Germany for your German non-premium data center, if you have any potential impact on your, let's say, free cash flow and P&L and also your CapEx guidance?

Okay. In my interview, I said EUR 300 million because in this value, we include, I suppose, rise EUR 100 million, EUR 150 million from the sales and leaseback of the presenter. The project is going. We send the teaser preliminary teaser the potential bidder. We completed due diligence end of May, and we expect to receive formally the first offering in June, and we will decide in June if we go or not to this deal. Timing for M&A, probably the German one is more fast. I think one quarter. The diligence is not so easy because the company is not small. It's not only in Germany. They have a branch in U.S. very small branch in U.S., but mainly in Germany. And that means more time to do the due diligence, technical overview, customer side. And I think we need 2, 3 months to complete diligence. After that, we can decide if we go or not. At the same time, we have another small opportunity time line is always summer. I think end of summer, we can decide if you go or no is the time. In terms of CapEx for sale leaseback, IFRS15 means we put in the CapEx naturally the whole contract of the lease. So in case of sales leaseback, for example, I assume EUR 150 million, we put in our CapEx, EUR 150 million, and we will save the same amount of cash. It's natural on the leverage of the company, but not in our balance sheet is a CapEx because we put the 10 years contract lease in our debt and like assets.

The next question is from Giovanni Selvetti of Berenberg.

I was wondering if you can give a bit more flavor on what meaningful means for the acquisition in terms of revenues? What kind of revenues should we be talking about and whether the profitability of the target company is more or less in line with that of Wiit. And if you can possibly maybe explain in greater details how come the EBIT of Italy grew so fast in over 1 year, if there is a specific thing that -- or it is like you said the target remains 29% despite the jump in only 1 year.

Okay. I start to give you more about the M&A. The target we are analyzing is in the range of revenue of EUR 23 million, EUR 25 million in terms of revenue and EUR 12 million in terms of EBITDA is the size, okay? It's mainly data center business with infrastructure, and we have very, very -- I can disclose only naturally a lot of things, but in general, they have 2 represent in Europe. One is naturally part of the synergy. It's in Frankfurt, and we want to, in case migrating our account with Düsseldorf. The other one is in a very, very interesting city with very, very cheap cost of energy. I can say other, okay? But this is for the cost of energy. Italy, I think Italy can achieve this a bit more because the facility, the asset we have in Italy is 50%. The completion rate is 50%. That means the organic growth is accelerating because thanks to the Broadcom effect, we have a commercial pipeline very, very high at the moment in Italy. And I expect in Germany in the future the same. Currently in Italy, the pipeline is very, very important because a lot of ex partners Broadcom are forced to migrate. That means we can increase the utilization rate of the presenter without the expansion CapEx and the EBITDA margin could easily achieve 29% from 27% to 29% in Italy. In Germany, it's different. We started from 22% and the increase on EBIT in Germany will be directly impacted on the more high-value services we will sell on the customer base. In Germany, 30% of the business is premium, 70% is more traditional. We are changing the mix, but we need time. It's not one quarter effect. We need 18 months to change the mix of the revenue. But our target is to achieve the same level of EBIT in Germany, changing the mix of the revenue. In Italy, it's just in place.

The next question is from Domenico Ghilotti of Equita.

Well, first, I would like to thank you for the presentation because it's becoming richer and clear quarter after quarter, so much easier to follow your trajectory. I have a follow-up on the commercial pipeline that you were commenting. So I'm trying to understand how much is driven by the Broadcom opportunity and how much is, let's say, the underlying so the existing performance? And if you can remind me the churn impact in Germany in Q1? And how much do you expect for the rest of the year? Just to try to extrapolate the underlying organic performance net of the churn that you were mentioning in the previous calls.

In Italy, currently, the pipeline is increasing faster for the Broadcom effect. The normal -- let me say, the normal pipeline is in line with last year in terms of value. But on the top, we have an important amount. But what I anticipate, I need 2, 3 months to sign the first contract to understand how it is really signable or not. It's mainly in the indirect channel because it's related to provider Broadcom, it's not direct sales. It's carrier, small providers. It's more business for the indirect channel. But it's an important amount consider that if I analyze the total pipeline, the effect is 70% more of the normal pipeline on top of our normal pipeline. It's 3x now currently the pipeline. The effect of the churn, [ Laura, ] the normal churn, if you exclude the extraordinary churn last year was lower than last year in Germany too, the same. We have low churn in Q1, normal. We have not the full effect this year of the churn last year. The impact in Germany is EUR 3.8 million -- EUR 3.8 million full year. That means EUR 900,000 per quarter.

In 2026, you mean?