Maire S.p.A.

Good afternoon and welcome to our call. My name is Silvia Guidi, Head of Investor Relations, and I'm joined today by our CEO, Alessandro Bernini, and our CFO, Fabio Fritelli. Given the rising importance of technology in our group, Mohamed Nafid, CEO of NextChem, is also with us and is ready to address your questions on our technology roadmap. Today, we plan to cover MIRES operating and financial results for the first half of 2023. At the end of the presentation, we will be happy to take your questions. Let me now hand over to Alessandro for his introductory remarks and operational performance overview.

Thank you. Thank you, Silvia. Good afternoon, everyone, and thank you for joining MIRE's first half results conference call. The first half of 2023 has continued to show a robust performance. with revenues EBITDA and net income all growing double digit vis-a-vis the corresponding period of last year. Our 9 billion euro backlog was strengthened by 2.4 billion euros of new contracts awarded in H1, the highest order intake since 2018. These results start to benefit from the implementation of our industrial plan as announced last March. Our current strategic approach is based on our position as enablers of the energy transition and entails a dual business model with a new organization based on two business units. The first one, Sustainable Technology Solutions, is the home for solutions designed to enable innovative and sustainable processes offering technology licensing, high-value-added services, and proprietary equipment. The other one, integrated engineering and construction solution, is the home for a solution to realize future-proof, technologically advanced plans, thanks to our specialized know-how and world-class engineering expertise. A flexible and adaptable business model where technologies and ENC can be offered to our clients through an integrated approach, but it can also live independently. During our Capital Market Day, we shared the underlying growth drivers of the two business units. Let's look into how we deployed our plan over the last few months. We want to provide you with tangible examples of the effectiveness of this business model, starting with sustainable technology solutions. The increasing need for energy transition technologies, both in our reference market and in other air-to-abate industries, has led to a year-to-date order intake of approximately 200 million euros for STS. It represents a five-fold increase versus the first half of 2022. Our unique technology offering has been an essential success factor to achieve this outstanding result. In line with our plans, we keep working on the expansion of our portfolio, and our R&D department is focused on the development of innovative and increasingly sustainable solutions. Such an effort has resulted in approximately 90 additional patents so far this year, bringing the total number to over 2100. The development of additional technologies has also been pursued through external acquisitions with the purchases of concert and the cut technology, starting a trend that is expected to continue over time. The activities we are carrying out to keep expanding our technology portfolio have a positive impact on the whole business. In the first half of the year, for example, we were awarded three projects which involved STS as the technology provider and EMC as the executioner. We also cooperated with other partners. For example, we were among the founders of 30GEE, a consortium established by a cross-value chain combination of investors to accelerate the low-carbon transition of the EU agricultural industry. As we continue to develop our integrated strategic approach, we keep fostering the cross-fertilization of ideas within our group, which is crucial in the innovation environment. Moving on to integrated ENC, The powerful drivers which are expected to ensure significant growth of this business continue to be strong. In the current spending cycle, low carbon investments are gradually picking up, while hydrocarbons, mainly natural gas, will continue to bridge the gap to full carbon neutrality in the long run. It is exactly in this field that Myra can play a major role, thanks to our well-established leadership in our traditional markets. This can be clearly seen in the strong order intake of 2.3 billion, more than twice the same period last year. The growth in our S.p.A. business is delivering additional opportunities to be executed. For example, Of the three integrated projects mentioned in the previous slide, one is related to a green ammonia plant to be built in the United States based on our proprietary technology. We will see it in more detail later on. We are also seeing an increasing activity related to the revamping and upgrading of existing plants as clients are adapting their infrastructure in order to comply with more stringent regulation and market needs. In recent months, for instance, we have been particularly supporting our clients in the upgrading of refineries to produce higher value chemicals and products. Finally, we keep strengthening our presence in the extended EMC value chain, To this effect, we continue to be proactive in pursuing seed contracts, a value-added service which allows us to be engaged with clients since the very early stage of the project. We have seen how our two business units are positioning for growth. Now, we want to share with you more details about the evolution of our technology portfolio in the four clusters. in which we operate. Nitrogen fertilizers have always been a stronghold of our group, based on Stamicarbon's 60% market share in URA licensing. Our technology offering is well established in the market and spans from low energy fertilizer to blue and green ammonia. With new additional technologies that will complement our portfolio, our main objective is to accelerate the use of green ammonia as a fuel and energy carrier. We have been active in hydrogen since the early 70s, and we are now leveraging on our protected technologies in steam methane reforming. such as our unique cost-effective electric blue line route technology to produce clean hydrogen. On the green hydrogen side, we are developing cost-effective high-precious electrolysis solutions to lower the overall hydrogen cost and enable its direct storage and transportation. We are also looking at profitable ways to capture and, most of all, valorize CO2, transforming a cost into a possible revenue stream for our clients. We are working to expand our presence in synthetic fuels and chemicals. We are leveraging on our proprietary solutions to recycle municipal solid waste via gasification. We also have bio-based solutions for renewable fuels and chemicals, including sustainable aviation fuel, an area that will see a dramatic growth in the years ahead. Last but not least, our technology offering in polymers is wide and among the richest. Our sustainable portfolio includes plastic upcycling, chemical recycling and biodegradable monomers from fossil sources. This portfolio has also been strengthened thanks to the recent acquisition of CONSER and the CAT-C technology. In fact, the inclusion of both CONSER and CAT-C into our group has allowed us to jump start in the technology expansion, which is at the core of our strategy. In the few months since its acquisition, we have been able to expand the concept technology package to catalysts, and they extend the commercial geographical reach. At the same time, we started the activities from the scale-up of the CAT-C technology. Our portfolio expansion was not limited to M&A activities. We further internally developed other technologies to enhance our offering, including, first of all, NETCPO, a proprietary technology to produce a syngas via natural gas oxidation, which can be used to lower emission in refineries, decarbonize steel manufacturing, and to produce ammonia and sympulses. Second, the LEAPS pretreatment units, a proprietary technology for the pre-treatment of contaminated oil feedstock, like fats and oil, to produce sustainable aviation fuel. For both these technologies, the complete offering we can provide to our client includes licensing, process design package, and proprietary equipment. Overall, a bright feature which is expected to represent a key source of competitive advantage for the implementation of our strategy. Let's now look at the operational performance of the first half in more detail. The first half was characterized by a variety of new awards and initiatives. WIDELY DIVERSIFIED IN TERMS OF SCOPE OF WORK AND TECHNOLOGIES INVOLVED, REFLECTING THE POSITIVE MARKET MOMENTUM. IN THIS RESPECT, THE ORDER INTAKE OF BOTH BUSINESS UNITS REFLECTS THE DUAL EXPOSURE OF OUR GROUP TO THE TRADITIONAL BUSINESS AND TO THE SECULAR GROWTH IN ENERGY TRANSITION. Among the new awards, a common element was the growing demand for solutions able to reduce the emissions, improve energy efficiency, and lower the consumption of natural resources. In this slide, we have depicted some of the main awards and initiatives achieved in the first half, including the launch of the first circular hydrogen service station in Rome, to be built by Q8, where NexChem will act as the exclusive technology provider for circular hydrogen through its waste to chemical process to produce hydrogen from no recyclable waste. Let's now have a look at our order intake. Our order intake was very strong in the first half. with 2.4 billion euro of new awards. It was driven by a multi-billion dollar project in Middle East, making the intake the highest since 2018. The geographical breakdown reflects the leading role of the Middle East in the current environment investment cycle, driven by an increasing demand for downstream assets, while leveraging on the opportunity to move towards higher added value products. Our trailing book-to-bill ratio is 1.3, representing a tangible sign of our business growth. We expect an even stronger second half, which potentially could lead to one of the highest order intake and backlog ever. Thanks. to the strong order intake, our group backlog at the end of June was €9 billion, leading to a backlog cover of 2.4 times and good visibility in the short and medium term. A 25% expected runoff in the second half of this year provides a solid support to our 2023 revenues guidance. The geographical breakdown reflect again the spread of clients investment across the globe with a good balance outside the Middle East. Let's have a more detailed look at each business unit level. Starting from SPS, the effectiveness of our strategic approach can be clearly seen in the strong order intake achieved in the first half. The acquisitions were driven by nitrogen fertilizers and our offering spending from technology licensing to proprietary equipment and other high-value services. At almost 100 million euros, the order intake has more than doubled, leading to a backlog of 214 million euros, up by 54 million since the end of last year. A geographical breakdown is driven by the current nitrogen fertilizer project in Asia. While these months, July, 100 million Urea licensing and proprietary equipment award in Africa, be careful, not yet part of the June backlog, is expected to contribute to an increased geographical diversification. We remind the short cycle nature of this business, reflected by a backlog cover, which is at the parity. Moving on to ENC, the first half order intake was extremely sound, with a €2.3 billion of new awards. At the end of June, the €8.8 billion backlog and the resulting backlog cover of around 2.5 times provide good visibility on the years ahead, while representing a solid backbone to our business. Let us now look at a couple of recent acquisitions in more detail. At the end of June, we were awarded a $2 billion petrochemical contract in Saudi Arabia. The annual project relates to a major initiative set up by Aramco and Total Energy to develop a world-scale petrochemical complex integrated with the Satorp Refinery in Dubai. The project aims to convert field stock produced directly by the refinery, such as its off-gases and NAFTA, into higher-value chemicals. The award consists of two separate packages related to two polyethylene units each with a capacity of 500,000 tons per year and the derivatives unit. The scope of work entails complete engineering services, equipment and material supply, construction activities, pre-commissioning and commissioning. The project will have a duration of about four years, and it is expected to attract additional investment in a variety of industrial sectors. This award is a further recognition of Teclimon's world-class capabilities to execute complex projects in complex environments and confirms our leadership in downstream petrochemicals. Likewise, it consolidates MIRE's strategic position in the Middle East. On the other hand, a clear example of the advantages of our integrated approach is provided by the Green Ammonia Award related to one of the largest green fertilizer complexes to be built in the United States. This project sees the involvement of both our business units. Stonic Carbon is in fact providing the licenses and the basic engineering design, while KT, is carrying out the early engineering works on a reimbursable basis. Upon completion of these early works and subject to the clients in final investment decision, the activities will enter the engineering procurement and construction phase to be carried out by our ENC subsidiaries. This award is a fruitful proof of our capacity to act as a one-stop provider of proprietary technology and high-value engineering solutions. Moving on to the Group's commercial pipeline, we were pursuing opportunities worth over €56 billion, up by over €2 billion compared to March. In general, we continue to see a healthy set of attractive projects, driven by the resilience of our core business and supported by clients' willingness to invest in energy infrastructures and technologies for the transformation of natural resources. The previously mentioned step up of concert commercial efforts together with a significant increase in the other clusters has led to an almost doubled S.p.A. pipeline. Our technological leadership is also evidenced by over 2,100 patents across 160 families, a portfolio that keeps improving every year. Our drive toward technology innovation gained a new recognition in June when MIRE joined the Euronext Tech Leaders, an initiative dedicated to high growth and leading tech companies. In this respect, our group has been included in the subsector green production practices, of the cleantech cluster, encompassing companies developing production practices, products or services to reduce the consumption of natural resources. Let me now spend a few words on our international footprint. Our engineering workforce represented the DNA and growth engine of this group. For this reason, We are continuously strengthening this base with more than 650 new engineers hired in the first half alone, and the opening of a fifth office in Mumbai, in India. Further additions are expected over the next months in order to support an ever-growing backlog with a top-notch engineering workforce. We have progressed in the implementation of our ESG agenda also, with several activities carried out in the five areas of our sustainability strategy. Among the most important initiatives, we started implementing a new methodology for the calculation of Scope 3 emissions with the view of setting a reduction target before year-end. In the area of people, We have joined the Target Gender Equality United Nations Global Compact Accelerator Program. We have also supported the Women in Science engineering initiative led by aimed at encouraging young girls from rural parts of India to pursue higher education in science, technology, engineering and mathematics. This program led by the Indian Institute of Technology in Bombay, involved 165 girls this year. I will now hand over to Fabio for his review of the financial results. Please, Fabio.

Thank you, Sampoor. Our financial results show a double-digit growth across all the main KPIs. Revenues were just shy of €2 billion, up 21.7%, driven by steady project execution. GNAs were €41.5 million, up by €5.1 million, but with a decreased incidence over revenues, from 2.3% to 2.1%, thanks to our continuous focus on achieving efficiencies. EBDA was 120.9 million euro, up 24.1%, mainly thanks to higher revenues. Margin was 6.2%, up 20 basis points, and in line with the 2023 guidance. Net financial charges were 17.4 million euro, up 3.8 million due to the increase in interest rates on the floating rate portion of our debt. partly upset by a higher financial income. Moving to the bottom line, such a positive operating performance has led to a consolidated net income of €54 million, up 33%. Let's now analyze the financial results by business unit. STS revenues were €117.4 million, up 30.2%, thanks to the constant growth recorded in the technological solutions and services to support the energy transition. As a reminder, the first half 2023 figures include the contribution of the recently acquired sponsor. EBDA was 25.6 million, up 48.8% as a result of higher volumes. EBDA margin was 21.8%, 270 basis points higher thanks to our focused high value added products and services. ENC revenues were 1.8 billion euro up 21.2% thanks to the backlog consistent execution. EBDA was 95.3 million up 11.8% with a margin of 5.2% in line with last year. Moving on to the balance sheet, let's analyze the cash flows dynamics. Our adjusted net cash position at the end of June was 104.6 million euro, up by about 11 million compared to year-end 2022. Such a positive improvement is driven by a strong operating cash generation, which more than compensated 2022 dividends for 40.7 million euro. the Shared Buyback Program for €2.2 million, as well as net capex of €40.1 million, not including €17.6 million of acquired cash. In particular, the gross capex of €57.7 million includes €48.4 million for SDS, mainly dedicated to expand our technology portfolio, and €9.3 million for EMC, mainly related to projects on digital innovation. Let us now take a look at the working capital dynamics. The adjusted net trade working capital improved by 37.2 million euro from negative 113.8 million euro at year end 2022 to negative 151 million euro at the end of last year. This positive change is mainly driven by the project's advancements and reflects a normal dynamic of a significant backlog characterized by several multi-billion projects. I now hand over to Alessandro for his closing remarks.