Calnex Solutions plc

Good afternoon, everyone. My name is Juan Gaitán, Director of Investor Relations at Celnex, and thank you for joining us today for our KeyOne 2025 Results Conference call. Today, I'm joined by our CEO, Marco Patuano, and our CFO, Ramon Trujas, who will go through the key highlights of the period, and then we will open the line for your questions. If you wish to ask a question, please press star five on your screen to raise your hand. So without further ado, over to you, Marco.

Thank you, good morning, good afternoon everyone and thank you so much for your time. I start with a key highlight of the first quarter 2025 which has been marked by consistent execution reflecting our commitment with our objective. Let me remind that our reported numbers are impacted by a change of perimeter And there is no contribution for Austria this year and Ireland has only contributed two months in 2025. On a like-for-like basis, the quarter has been characterized by a solid performance across key metrics. We have achieved the remarkable growth with revenues reaching 964 million and representing an organic growth of 6.3% in our EBITDA after lease, reaching 566 million, implying an organic growth of 8.7%. Once again, we delivered on efficiencies on which Raymond will give you more details. In Spain, we are implementing a voluntary redundancy plan encompassing around 200 people, which is another example of our efforts to continuously optimize our operations focusing exclusively on our core activities and improving our performance. A notable achievement has been the successful completion of the sale of our operation in Ireland. this strategic move allow us to further streamline our portfolio focusing on core markets where we can drive the most of the value and generate financial flexibility from a capital structure standpoint we have secured a new syndicated loan for 625 million for refinancing purposes at a very competitive terms even in the current environment another highlight comes from the execution of our equity swap and the progress on our share buyback programme, which started upon the completion of the Irish deal. As of the 2nd of May, we have almost completed the programme. We have acquired shares for approximately €755 million. This transaction reinforced our commitment to returning value to our shareholders and, as we shared in previous occasions, €800 million constitutes our new floor for a shareholder remoderation perspective from 2026 onwards. Additional disposal may generate additional financial flexibility. In summary, we believe our journey today has been marked by the definition of a clear roadmap, a solid commercial operational financial performance and a consistent and disciplined execution. Looking ahead, we are reiterating our guidance and we will continue showing an undeterred commitment with our promises. So let's move to slide five. Here we just want to illustrate our share price performance compared to the recent evolution of our key financial metrics. In the 2022-2025 period, using for this purpose the market consensus, We increased our EBITDA after lease by 36%, our recurring level free cash flow per share by 46%, we reduced our leverage by 1.3 times of the EBITDA, and we started a meaningful cash shareholder return of 800 million. In the same period until today, our share price appreciated only 10%, showing a very high correlation in macro factors, regardless of our solid business fundamentals. We are leading Tauaco with strong and secured growth backed by the largest backlog in the industry and with the longest contracts with the clients. Slide six. The current macroeconomic and geopolitical situation is clearly impacting the performance of the financial markets, but I believe that the European digital infrastructure sector has a unique opportunity to demonstrate against its resilience in complex scenarios. Compared to other industries, digital infra is a defensive asset with the proven ability to withstand economic challenges. We have analyzed different potential consequences that, in our view, could impact the sector in the event of a tariff increase, and we believe that we are impact-free. Let's move to customer behavior. Celnex's strength sits on its long-term B2B contracts with its clients with a complete European focus, ensuring a stable and predictable revenue stream. Inflationary concerns. Celnex's revenue model is robust and visible, with the vast majority of our revenues adjusted to inflation or fixed escalators. Supply chain impacts. Sunnex strategic sourcing ensure that our operations and our investment will remain unaffected. Recessionary fears. The telecom sector is seen as a defensive industry due to its reduced exposure to variable revenue streams. Sunnex in particular has outperformed the broader market during crisis period such as the COVID-19 pandemic. Additionally, After assessing the long-term expected evolution of the FX, the interest rate dynamics, and the point of our balance sheet, we expect no impact. Moving to slide seven, we want to provide a quick update of our share buyback program announced earlier this year, and which total today is almost completed. As of the 2nd of May, We have already executed 93% of the program at an average acquisition price of around 33 euro per shares, and we're expecting to complete the program in the coming days. As I already shared, we believe our stock is undervalued, so this moved us to consider a share buyback as the most dedicated way to remunerate shareholders. And finally, I would like to reiterate our financial outlook for 2025 and 2027 with projected growth across all key metrics thanks to the attractiveness of our business model and the visibility it provides. We demonstrated our ability to adapt to changing reality. We've shown the capacity to consistently execute our strategy and we're creating a solid track record delivering operational and financial results, quarter after quarter. I hand over now to our CFO, Raimon, who will provide additional details on the period.

Thank you, Marco. Good afternoon, everyone. Please allow me to provide during this section a bit more granularity on our financial and operational metrics for the period. Let me start reminding you again on slide 10 that our numbers this quarter are impacted by the change of perimeter. as there is no contribution from Austria this year and Ireland has only contributed for two months. This table gives you a cleaner comparison as we are removing this effect from our numbers. On the left, you can see our actual reported numbers. Then, if we exclude the revenues and the results from Austria and Ireland, we got the pro forma results. Finally, on the right-hand side, you can see that the organic 2025 pro forma with very strong growth at revenues and at EBITDA level, with more than 6% and close to 9% respectively. Moving to our financial performance on slide 11, our revenues have increased 6.3% and our adjusted EBITDA has grown 7.7% compared to the same period last year. Both growth rates are on an organic performance basis. Our EBITDA has increased 8.7% on the same basis, further highlighting our operating leverage and our ability to optimize our operations, enhancing profitability. In terms of cash flow generation, our recurrent level of free cash flow amounted to 351 million and its growth will accelerate throughout the year thanks to the normalization of cash items below EBITDA as I will explain later in a bit more detail. Moving to our key operational metrics, we have added 1,216 new sites in the context of our B2S programs. Our gross collocation reached 1,109 And in the context of efficiencies, we have undertaken 887 land site actions backed by the creation of our land code, demonstrating our commitment to optimizing our assets and driving operational efficiency. As you will see later, we are improving our least cash output tower. If we move to slide 12, on the first quarter of 2025, there has been another quarter of consistent commercial performance with POPs growing 4.3% compared to the same period last year. This is explained by the progress made on our Build2Soup programs, which represents 2.5% of the growth coming primarily from France and Poland. In France, as you can see, this quarter we have had an acceleration of the Build2Soup program, allowing us to accelerate growth within the year. Net allocations are contributing 1.8% in the period. It would be 2.2 if we exclude the impact of the MAS Orange impact in Spain. In the first quarter 2025, net collocations have been lower as a result of the already announced contract with MAS Orange in Spain. As a reminder, this contract gives our client network flexibility in the short term in exchange for a single longer contract until 2048 and additional services to be provided by CELNEX. As per this agreement, no impact in revenues is expected until 2026, despite the turn that we see in terms of OPS during this year. If we move to the next slide, we provide you a clearer picture of our performance in the period we have excluded the impact from change of perimeter. We are providing here our organic revenues bridge on a pro forma basis, excluding Austria and Ireland from the first quarter 24, and from that base building our organic revenues for the first quarter of 2025, which have grown at a robust 6.3% with a well-balanced mixed growth linked to CPI, co-location and business. On slide 14, we have followed the same approach of adjusting the perimeter to look at the specific performance of our different business lines. The tower segment grows organically 5.8% on a performance basis. Fibre and connectivity grew 24%, mainly due to the project with Bouygues in France. DAS and ACTIV grew 5% and broadcasting services grew 3%. As you can see, we keep having a strong and well-diversified growth on all our business lines. If we continue to slide 15, as part of the strategy set out at our Capital Markets Day, in our continued focus on industrial excellence, we have the objective to become operationally more efficient, rationalizing assets, optimizing our cost base, and improving the group's overall productivity. Here, we're stripping out the contribution from Ireland and Austria to provide a cleaner analysis of the performance on our different components. On staff, it is worth highlighting our ongoing efforts to streamline operations and improve efficiency. This reduction in headcount is part of our broader strategy to optimize resource allocation, enhance productivity, and focus on core activities. The numbers today do not include the impact of the recently announced redundancy program in Spain, which will be implemented over the 2025-2027 period. This plan will also result in discontinuing certain operation and maintenance contracts with an associated negative EBITDA contribution. As you will see later in the P&L, we have booked this quarter a provision to execute the redundancy program, although the associated cash impact will be seen during the next three years. On repair and maintenance, following the positive performance last year, we continue to see good progress in the period, with costs flat on a per-tower basis, meaning that we are saving to compensate inflation, and the evolution of our general expenses translates into a 2.3% decrease on a per-tower basis. Finally, on leases, we have been able to reduce the cost 2.3% per tower. Our land acquisition plan is picking up speed, deploying capital at very attractive returns while securing strategic locations for the future. Additionally, our efforts in rent renegotiation and cash advances are well on track, further contributing to the optimization of our operations. the first quarter 25 we have invested 13 percent more in land acquisition and efficiency capex compared to the same period last year the results of the strong growth of our revenues and the continuous work on the cost reduction can be seen on the slide 16. our efficiency measures are helping to first absorb inflation second offset incremental costs associated with growing perimeter Third, improve our margins. Our EBITDA margin is 83% versus 82% last year. And finally, generate operating leverage. A 6.3% growth in revenues translates into almost 9% growth in EBITDA, as Marco mentioned before. If we take a look at our debt maturities on slide 17, You can see that there are limited maturities left in 2025, as we have repaid debt with the proceeds from disposals and refinanced other maturities via new bank financing, particularly a 625 million term loan at very competitive terms, as you can see. We keep working on extending the duration of our debt and flattening the maturities over time to have an even more robust and well-designed capital structure. our liquidity remains high at approximately 4.7 billion with our debt being approximately 80% fixed with short-term maturities that have been managed. So our average cost of debt will only marginally increase in the upcoming years. Last but not least, we have been able to execute an 800 million share buyback whilst maintaining our commitment with the rating agencies. Finally, on slide 18, you can see that we are reiterating again our 2025 outlook, whilst providing visibility on the expected phasing of our key financial metrics during the year. If we focus on the bottom of the slide, it is important to understand the phasing constitutionality of our cash items below VTAL. The first half of 2025 will be more intense in terms of lease and interest payments, due to the structure of our contracts and the coupon schedule, as it already happened in the first quarter of 25. Additionally, as you know, last year, we did a significant work to optimize our working capital. We ended 2024 ahead of our expectation in terms of improvements. So this impacts the working capital slightly on the first quarter, but we expect this cash item to turn positive during the second half of 2025. We have already identified measures to keep on improving our working capital. So despite timing defects in the period, we are in a position to reiterate our guidance. And with this, we now remain at your disposal to answer your questions.