Bilfinger Se Unsp/Adr

Good afternoon ladies and gentlemen and welcome to Wilfinger's third quarter 2020 for results call. My name is Martina Borger and I'm heading the investor relations team since beginning of October. Today I'm joined by Thomas Schulz our group CEO and Matthi Jekyll our group CFO. We will start with a presentation on the quarterly highlights and financials and then open up the call to your questions. You can ask your questions via phone by pressing star and one on your keypad or via chat in the webcast. During the presentation, all participants are in a listen-only mode. The conference call is being recorded. With that, I hand over to Thomas Schulz.

Thank you very much. Hello, everybody. We would like to guide you through our third quarter 2024 for our Billfinger Group and what we can say is quite a successful quarter and another step in the direction for fulfillment of our mid-term targets, which is a growth of 4-5% per annum as well as 6-7% EBITDA. In the quarter, we received more than 30% orders, 18% organic growth, quite significant in that market where we operate in. Revenue is up 15%, organically 2%, and our EBITDA margin made quite a jump from 5.1% to 6%. Our free cash flow was in the quarter 55 million, coming down from 61 last year, but it was the fifth quarter in a row positive, and actually the year-to-date figure is significantly higher than it was last year. We confirm our outlook for 2024, and we keep the guidance on 4.8% to 5.2%, and the EBITDA to 4.8% to 5.2%. And as we communicated before, in both our midpoint is really the target area where we go for. The markets are stable to positive in all target markets and industries. Our earnings per share moved up from 0.98 to 1.49 euro. And the acquisition, the stock business, what we acquired from 1st of April this year is well on track. Before we go into the markets and into the financial figures, safety. Occupational safety is a very high priority for us, and we are quite market leading in that area for our clients who have very, very large interests, the same as we. If you look on the right upper page, it's the total recordable incident frequency, and it came down from 125 to 0.88, really a good move in the right direction. If it comes to the lost time injury frequency rate, that is actually up from 0.12 to 0.29. But when we look over several quarters or several years back, we see that we are moving step by step and a little bit too slow into the direction of zero. But we have a lot of activities on board to speed that up more. With that, I would like to give an information as we did in an open letter on the Internet regarding the incident in U.S. which happened in October, means in the fourth quarter. Our US subsidiary Centennial completed the works as the contracting company for that order in 2021, means three years in operation. The cause of the incident is still unknown. We and Centennial is supporting the authorities and of course is available if necessary to assist. Now into the markets and industries. And as you know, we operate in four main industries, energy, chemical, petrochem, biopharma, pharma, and oil and gas. Let us start with energy, which makes roughly 20% of our top line. The market outlook is stable to positive over all geographies and customer ranges. We have an increasing demand in the energy sector for that what we as BILFINGER cover, especially nuclear has a significant revival in all countries besides Germany. The outsourcing potential, that means the business what we get offered and what we can capture from our clients is good and stable in that area. Important to mention here from all the areas is the new U.S. administration because the verbalization towards conventional energy resources is rocket high and we expect quite a shift more into conventional energy resources. If we then look into the chemicals and petrochem business, which is roughly 25% of our top line, as you see on the graph on the left side, we are roughly on the pre-COVID year 2019 level in the markets where we operate. For us, the market is stable. We see that the global petrochemical demand is growing, especially in the mid-term, but we have significant regional differences. The outsourcing potential in that area is increasing to good. And here, a special highlight is the U.S. market again with a growth potential of 3-4% for the next two years. And not to forget, the Middle East has quite a significant production growth. If we then go to the next page with pharma and biopharma, around 10% of our top line, you see in the graph that we are in 2024 expected 36% up in the production index versus that what we had in 2019. Definitely the most growing area of the industries what we have in the Bilfinger Group. The market outlook stays quite positive. Global investments. remains quite strong. We have a good and increasing outsourcing potential. The demand over all kind of societies for pharma and especially biopharma products is still going up. The growth is based on more localization of production, reduced time to market for innovation. That means new products are getting faster into production and then to their end clients. And that drives quite a lot of business opportunities for us. In the oil and gas, which makes roughly 20%, market outlook is stable, we have a good and increasing outsourcing potential, and we see, especially with the new US administration, a lot of movement into growth out of North America. Out of that, some special view on that what we see as our demand, as the Billfinger demand. You know that we for quite a while now show you what we call the opportunity pipeline. It's that how we index the market based on July 2022, how much business potential we have in front of us. And when you look into it, you see that we had two years ago between 95 and 100. 100 was the index for the July. Last year was between 94 and 104. And this year between 102 and 110. The reason why I bring that so specific, it clearly shows that we have a higher single-digit growth of opportunities in all industries and areas where we operate in. The orders received actually moved up 31% from last year to 1.344 billion euro. It's an 18% organic growth. You see the acquisition with more than 100 million in it, and you see project business with a quite high figure. That comes out of individual orders, especially with technologies, what we see in the future as standardized products. It is green technology, especially in that part. the order backlog is on a very healthy level, moved from 3.378 up to 4.109 billion euro. When we then go further, We have some selected orders to show you on which kind of orders we work here. On the left side, it's from Zeeland Refinery in the oil and gas in the Netherlands. It's a six-year contract for what we call all-in-one maintenance for the refinery out of a Billfinger single source. This is what we were able to offer and being successful in getting the order based on the new acquisition to add that on. So the package what we offer to clients is really a full package and makes us very competitive in any market. In the mid part of the picture, we have energy with the MAN energy solution in beautiful Denmark. It's about heat pump supply. It's about engineering and mechanical integration for the city of Aalborg so that they get climate neutral district heating system. On the right side from Germany, from our client RWE, again in the energy sector, out of the segment technology, it's about 100 megawatt electrolysis plant for hydrogen production and with all what we do, supply capacities. All the three orders shows that our vision to be the number one in efficiency and sustainability really is on a very good track. Out of that into innovation. You only can expect that you are the number one with your clients if you renew the way how you do efficiency, the way how you do sustainability. This time we show you the Billfinger corrosion detection. This is a special system with x-ray control on work where you have insulation around pipes or tanks or other material. And as you can imagine, the risk for the clients is that you get corrosion under that insulation. In the old version, you have to build a complete scaffolding and then dismantle a lot of that insulation to check where you have this corrosion, which could lead to leakage. With this system, it's no need to take away insulation at all until you find the spot where you have corrosion. That makes the whole work not only more safe for the people doing it, it actually makes it significantly cheaper in the cost and it makes it significantly faster. That kind of efficiency improvement we bring to our clients. Out of that, I would like to give to Matti Jekyll, our CFO.

Yes, thanks, Thomas. Good afternoon, everyone. Let me give you some flavor on the numbers. First of all, group numbers. And then after that, we'll talk about the segments and then finish up with the group view again. Revenue increased by 15% in total, absolute numbers, to 1.28 billion euros. This includes roughly 140 million euros for the acquired business, meaning that the organic growth achieved 2% top black. On the bottom line, EBITDA grew to 6.0%, 6.0% EBITDA margin from 5.1% one year ago. The 76 million euro EBITDA includes 8 million for the acquired business. If you deduct this number and divide by the revenue for the last year's quarter, you come as well to 6.0%. So the EBITDA margin improvement comes out of our business. The improvement stems from an increase in our gross profit margin, which grew from 11.0% to 12.3% on the back of our strategy, meaning positioning, operational excellence and efficiency are at full speed and are working. At the same time, our SG&A quota went down to 6.1%. The cost in total grew, but this is due to the acquisition. So if you compare the organic numbers, EBITDA increased by 2%, and Revenue increased by 2% and EBITDA in absolute terms increased by 20% from 57 to 68 million excluding the acquisition. So a significant improvement 12 months later. This also turns into a significant increase on net profit and earnings per share. You see the EBIT of 76 million, the financial result, which shows a slight improvement over last year, giving us another uptick on the EBIT. Taxes, obviously, when you make more money, they are higher for 56 million than in 2017. The earnings after tax for continued business and with the discontinued business and minorities, this comes to 55 million euros for the quarter in net profit, giving us an earnings per share of 1 euro 45 after 98 euro cents in quarter three 2023. That's an increase of 49% or 48% on the earnings per share. cash flow and working capital in absolute numbers the third quarter 2024 is just a bit lower than last year 2023 61 to 55 however this comes on the back of a very good first and second quarter in 2024 and as we have planned and explained various times that we We'll moderate our intra-year cash flows from very negative in the first half to very positive in the second half to a more even profile. And this is working in 2024. Year to date, last year we were at minus 12 million and this year we are at plus 105, which is also a reason why we are adjusting our outlook on the free cash flow for the group. Net liquidity follows the free cash flow. What is interesting here is we are showing the effects, the liquidity effects of the acquired business in each quarter. So 29 million cash out in the first quarter. 21 million inflow in the second quarter and 6 million outflow in the third quarter. If you add those numbers together, then the net cash out for the acquisition was just 14 million euros. With our very good earnings and margin, there's no issues on the gearing ratios on the financing targets. So 108% on FFO to net debt and 0.73 on the net debt to EBITDA. So there's a lot of headroom, as we have explained various times before, and that remains in place. Now, A little bit more flavor on the segments. Segment Europe, others received very strong 8% in organic growth, including the acquired business, it's 27%. On the right-hand side, you see orders received were 126 million for the acquired business revenue, 140 million, and EBITDA 8 million, which is a margin of 5.8%. So that business is doing quite a bit better than what we had anticipated when we talked about this transaction earlier this year. Orders received for Europe with significant organic growth. This is due to increased maintenance activities across all industries and all geographies. So we are very well underway to achieve our mid-term targets, which is 4-5% growth. On the revenue side, we see a flat quarter, but we do know that we have these seasonal ups and downs from time to time. And what we see here, that's a bit of a mixed picture. In the third quarter, we see increases in Belgium and Holland, in UK and in Eastern Europe, and we see a flat development in the German-speaking areas and also in the Nordic countries. If we look at this from an industry point of view, the increases come of oil and gas and petrochemical, while the flat and slow or slight declines are in the chemical industries. Profitability increased quite nicely from 5.8% to 6.3%. Again, this is due to a good product mix, operational excellence and the effects of the efficiency program. Over to international and there we have a little bit more to explain. So orders received, they normalized versus prior year quarter, but continuing our overall positive development that we have seen over the last few quarters. Book to bill 1.03, which is an indication that the company and the business is growing. Revenue quite stable at plus 2%, especially in the Middle East and there, especially in the engineering sector. We have seen some very nice order intakes, so we're seeing some strong growth. Growth in engineering always means that then the larger work construction and maintenance will follow anytime soon. So it's a good and early indicator for what is ahead of us here. Now to the EBIT A in the segment, it shows a negative 9 million, minus 9 million. This 9 million includes about 15 million of one-time effects. We had for a long time a legal proceeding in the United States on a contract that was taken in 2018 and completed in 2020. And while in execution, a dispute arose with the client and it has now taken four years to complete the arbitration. The arbitration was completed in our favor. The overall impact on the group bottom line is pretty much zero, which means that the risk provisions that were taken were sufficient and well estimated. However, the risk provisions were taken in two places. One is in segment international and the other one is on group level. So while we are seeing a negative effect in the segment here, the offsetting impact is on group level, which you will see in a moment when we talk about the reconciliation of the group. The other effect is that we have taken another risk provision on the discontinuation of our project business which we have talked about many times in the last few quarters that we are getting out of that piece of the business and as always we do find a few things here and there and so we felt it was appropriate to do some risk provision here. If I remove that those two one-off items, then the EBITDA margin on the underlying US business is 2.5% profit. Technologies, significant growth, about 50% over the last year's quarter, particularly in pharma and biopharma, as well as in energy. So book to bill at 1.4 is an indicator for strong growth. Also growth on the revenue side plus 9% which is a natural consequence of the good order intake we have seen now for a few quarters. Profitability following the revenue 6.9% after 5.8% last year, so from 10 to 13 million euros for the quarter. Again, product mix, operational excellence and efficiency program are showing their positive effects as we had expected when we announced our strategy. So on the basis of these results, we have made adjustments to the outlook on segment level. E&M International, we have taken down to 0% to 1% EBITDA margin after 2.5% to 4% previously. Revenue is unchanged. Technologies, we have taken higher. from 5% to 5.5%, now to 5.7% to 6.2%, revenue outlook unchanged. And due to very favorable business in South Africa, we have increased the revenue on the reconciliation group from 50 to 75 to 90 to 115 million. And also the EBITDA, which is an absolute number because the number of effects play a role here. It was minus 25 to minus 15, has improved by 20 million. to minus 5 to plus 5 million as a consequence of the release of the risk provision in the U.S. and an improved business in South Africa. With that, I hand it back to Thomas. Thank you, Martin.