Prysmian S.P.A. Ord

Good day and thank you for standing by. Welcome to the Prismian 9M 2024 Integrated Results Webcast. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one, one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Massimo Battaglini, CEO.

Thank you and welcome everybody to the third quarter of the course. Extremely proud to say that we achieved a significant uptake in our results in Q3. If you look at the right-hand side of the page where Q3 data is reported, you see 540 million euros of EBITDA, first time achieved by the company. Even more exciting is the 11.9% EBITDA margin and achieved in this specific quarter. And part of this is certainly due to the successful acquisition and integration of the anchor wire perimeter in our scope. Also, you see in the heading 1.8% organic growth across the whole company business unit, which is significantly for us, is extremely satisfactory and is suggesting that we are really leveraging on the capability of the company and taking advantage of the market trends. Also, let me complement this nice set of results with the free cash flow, close to 1 billion last one month, and the 36% reduction in CO2 emission coming from scope 1 and 2 versus our 2019 baseline. Of course, the significant growth in terms of EBITDA has been achieved through a strong performance of transmission, as you will see in a while, and power grid supported by the INC increase in perimeter and in profitability with stability in digital solution and slight decline in the spatial cable business unit. With this acceleration in results and also thanks to the change of perimeter of anchor wire, I mean, what we told the market one year ago is, I would say, obsolete. We achieved already the 2 billion EBITDA level in 2024, which was, by the way, the target in 2027. So we owe the market a new ambition. And we will disclose our revised and refined strategy and our vision for the next years in March 26 in New York City. Why USA? USA because of two things. First of all, we are super exposed to the US market, following the acquisition of AnchorWire, compounded by the original strong presence in many seminal business in legacy prism and transmission and power grid and digital solution. And also second reason, because we want to make investors feel and touch live the asset, the quality, the value of all the assets that we acquire. So there will be, after the capital market day, a visit to the McKinney site in Texas on March 27th. Moving to the first business transmission, super happy of the organic growth since 17.5%. This has been obtained mainly through pricing, mainly through installation incremental volume. we are still not close, we are close to benefiting, but we are not still benefiting from the capacity expansion, which on the contrary, we will benefit from next year, from mid next year onwards. So the 17.5% particularly satisfactory to us, but even more important is to recognize the EBITDA margin achievement in quarter three at 15.3%, coming from 13.8% reaches the average of first half 2024, and coming from 14% from the year-on-year comparison. The EBITDA absolute value is pretty high, 92 million. The 15% level is something we're going to achieve and maintain also in quarter four. So this is certainly giving us confidence that what we told that we would achieve next year, namely the 16% level of beta margin, is within reach. Definitely with our good execution, with additional capacity increase, and with the good margins coming from projects in the existing backlog. The backlog has remained at 18 billion level in this quarter. No major adjudication awards have happened in the market. There will be additional expectation for quarter four with some some business will be landed by us. And so we anticipate the year-end backlog will be higher than 19 billion euros. Let me move to Power Grid. Greater EBITDA margin definitely is the way, in my view, to describe the quarter three performance, 13.6. We are coming from a softening in EBITDA margin in quarter two, and we now consolidate in a solid 13.3% for the nine months of 2024. We also had good signs of growth, 2%. Of course, in this space, we embed a different segment of business. So there is stronger growth in medium voltage and HVAC. And there is softening in demand in low voltage cable and overhead bare transmission cables. But all of it compounded turns in a 2% organic growth. Remarkable results also consider we've been hit by some business interruption resulting from the hurricane that hit our South Carolina plants at the end of September 2024. Moving to INC, I think you immediately appreciate the value accretion coming from the anchor wire acquisition. Looking at quarter three per se, you see 11.5%. Last year it was 9.4%. If you take the first half EBITDA margin of INC, it was 9%. It is raised to 11.5%. So significant accretion. In this quarter, you should consider that out of the 211 million EBITDA, 100 million is coming from, are coming from amplifier perimeter appliance. We are happy to confirm a great progress in the integration process. The new agents structure is in place, has been set in place since August 1st. We're working on integrated organization. And I really excited to confirm also from my recent visit in September, October, that the quality of the asset that we acquired and the power of the service model and in addition, the value and the capability and the know-how of the EncoWire team are really and truly outstanding. Let me move to specialties. Here we are not satisfied by the organic decline and by the EBITDA margin percentage, although we have to recognize this is specifically coming from two business sub-segments. One is the automotive business where we recorded significant downturn in volume and in pricing. The other one is the oil and gas perimeter cables and also the whole technology solution, the one we provide to oil and gas platform to connect the platform to the seabed. So we had some contraction in margin and volume, which has resulted in today's performance in quarter three. We continue to remain positive in the business. Quarter four would not be much different from quarter three, we anticipate, but we are working on the mix improvement on the rest of the perimeter to make more satisfactory, to achieve more satisfactory results from quarter 1.25 onwards. Digital solution, it is stable volume-wise. You see the organic growth is slightly negative. We finally seen in this last month of October, not yet reporting importantly, obviously, significant volume uptake in the American market. So this is positive signs of that probably the market has finished longer lasting this stopping phase. And we are in a rebounding mode, particularly satisfied by the 14, almost 14% EBITDA margin. And in absolute value, we moved from 35 million EBITDA to 45 million this year, which is reassuring. We expect that this volume demand uptake continuing in the coming quarters and becoming even stronger in 2025. The nine months show, again, stability at 12% EBITDA margin, which for us is a good level for the current level of market demand and profitability. The comparison to 2023 is a bit unfair because in first half of 2023, we were still not at the peak of the market, but we were enjoying a significant level of backlog coming from 2022 that we, in the end, deliver in 2023. One important slide to comment how crucial to our growth strategy is sustainability. On the one hand, on the first KPI, you see the importance of the scope one and two reduction in emission, but this is our internal contribution to the decarbonization of the world. We are on track and actually very aggressive, despite that we have to align also the anchor-wide perimeter to these targets. We confirm our present targets overall. But even more satisfied we are from the second KPI, so the percentage of revenue of the company linked to sustainable products. This has risen to almost 50% of those total revenues. So this is not as important as it is in terms of the way we see sustainability as a lever to achieve organic growth, a lever to engage more customers. and satisfy more customer needs in terms of low carbon products in the market. And the third indicator, the recyclability content of products shows another important step change in performance. 15.7% level of recycled products in compound and copper material. With this, I will hand over to Francesco for the financial

Thank you, Massimo, and good morning to everybody. Profit and loss recap. Of course, as Massimo anticipated, the nine months include the anchor wire consolidation since July the 1st, so basically for the third quarter. Organic growth, which obviously exclude anchor, as Massimo said, is positive in the third quarter by 1.8%, driven up very significantly, very positively by the strong performance of transmission with a strong double digit growth and also positive growth pattern, both in INC and in power grid. uh a very solid uh ebda for q3 at 540 million i would say even better in terms of ebda margin which is 11.4 percent year to date and close to 12 percent for q3 of course this is benefiting of the accretion coming from the anchor consolidation in q3 other than this i would say that our ebta margin are quite stable around 11.1 throughout the three quarters to remark uh the very strong progression of the transmission business both in terms of total ebda and in terms of margin with margin in q3 exceeding 15 percent very well positioned for achieving our medium and long-term targets which were announced last year at the capital market day uh no no sorry The financial charges, of course, increased significantly, up from the 70 million last year to 133 million. Of course, the effect of the acquisition financing and of the acquisition kicks in the beginning of July, in the third quarter, and this is the largest part, almost the entire of this increase. The net income is extremely positive, 619 million, benefiting also from a pretty low level of tax rate at 22%. Let me remark that we plan to close the full year with a net income between 850 million And this is very significant in terms of the progression of our earning per share. You're reminded that the capital market, they were announcing a year-on-year growth greater than 10% starting from 2022. 2022 EPS was around 2 euro a share. I think that by the end, the full year 2024, we will be in the region of 2.9%. uh your share so it's definitely a progression which is much ahead of the targets that we had announced that that that capital market day okay we can move to the cash flow as massimo anticipated a very strong last 12 months free cash flow close to 1 billion and extremely well positioned to achieve our our guidance save the 900 million free cash flow for the full year uh the debt is reflecting the movements coming from the anchor wire acquisition you see 4.1 billion and also the movements coming from the convertible bond conversion which is a positive in in june july this year and also coming from the execution of the share buyback, which is ongoing. That so far has been executed for approximately 170 million year to date September and that of course we plan to complete between year end and the first quarter next year. Let me add that the expectation of net debt for year-end is absolutely in line with our original expectation and is for net debt in between 4.4 and 4.5 billion at year-end, which is a leverage in terms of net debt on EBITDA of approximately two times. So a very solid and very healthy financial structure. Back to Massimo for outlook and conclusions. Thank you.