Prysmian S.P.A. Ord

Good morning and welcome everyone to the earning calls of quarter 1.25. We are really off for a great start in 2025 with an EBITDA that hit 527 million EBITDA, million euros, well ahead of last year, even if you consider the 95 million extra perimeter due to the anchor wire consolidation in quarter 1.25. The EBITDA margin, which you see at 13.1, is reported according to the standard metal prices. So those are the metal prices based on the average of metal, copper, and aluminum, and lead prices in the 10 years preceding 2019, which you know very well because they are normally reported in the appendix of the Analyse Code. The organic growth was fantastic, 5% EBITDA, certainly driven by transmission, but also supported by stability in INC, in power grid, and growth in digital solution. Free cash flow also outstanding at 1 billion euro for the last 12 months. ESG performance in language expectation, minus 37 risk of one and two reduction versus the baseline. I remind you that our target for 2025 is to achieve at least 38%, so we're well on track to achieve it. Net zero is confirmed accelerated by the end of 2035. Revenue linked to solutions sustainable is as high as 43, and we have a significant improvement in the recycled content of copper, mainly recycled content of material. with this 19% from the business point up on the average of last year. Thanks to a significant availability of copper waste in our US perimeter, which Anchor Wire took advantage of. Moving to transmission, I mean, all KPIs are super great, super satisfactory. The organic growth in particular is 60% never been that high. It is certainly driven by some extra activity, not necessarily coming from the extra capacity. We are at only additional capacity in terms of one installation method, Mona Lisa, that joined our fleet at the beginning of this year. But as far as manufacturing is concerned, we are more or less the same as last year. The capacity improvement will happen in the second part of this 2025. EBITDA wise, there is a significant surge from 60 million to 124. EBITDA margin from 13 to 16.9. Talking about current metal prices, you see the margin underneath the bar chart. We are at the famous 16.6%, which is already itself ahead of what we committed to achieving in 2025. 16.9 is sustainable. Yes, it's super sustainable. We will end up at the end of this year with a margin slightly ahead of the 17% plus for the full year. The important reason for the BIDAC increase of 60 million is on the one hand, we really had this quarter an impeccable execution during the installation and manufacturing activity. we benefited from projects with better margin than last year. Last year, on the contrary, we had some costable runs that hit particularly badly quarter one, 2024. Sequentially, you see, despite this is not supposed to be the stronger quarter in the transmission space, quarter one, 2025, sequentially, we're also ahead both in absolute EBITDA and the margin terms ahead of quarter four, 2024. The backlog remains pretty high, 17 billion. We count on some additions that we should see this year, coming from IPTO frame agreement and national grid. But in quarter two, quarter three, we'll see what will happen in this regard. Our grid, we are pretty flat, which is slightly declining organic growth, more related to the tough compensation of weight cost one last year. We also had to account for some, I mean, bad weather impacts in the famous U.S. footprint in quarter one, which also affected the IEC business. There may be some wait and see situation within the U.S. space, given the current tariff and dynamic happening in the markets. But EBITDA-wise, we are in line with quarter 124. In terms of EBITDA margin, I think here is a way, it is where you can best appreciate the more effective way to read the profitability. If you look inside the bar chart, you see an improvement in a bit of margin at standard meta prices from 14.8, quarter 1.24 to 15.2. If you look at, on the other hand, at the current meta prices, they will then move from 13.5 to 13.3. So this is the effect of dilution. in quarter 1.25 due to the incremental value of metal in our revenue. So that's why the standard margins are the best to appreciate the real inherent and genuine profitability of the business. In sequentially, we confirm profitability, stability, 15.4, 15.2, and also stability in EBITDA, in EBITDA absolute value. Industrial construction, also here pretty flattish in terms of organic growth. The comparison year over year is a bit difficult to appreciate because quarter 1.24 was without ANCO, while the 173 million of quarter 1.25 are with ANCO. But if you normalize ANCO and you consider a pro forma quarter 1.24, you should rate that 114 as the 208. So we confirmed that we are 35 million below, quarter one, 24 perform. All of those 35 million belong to January and February US. March situation is completely different. The EBITDA margin has significantly improved to the point that maybe we can also anticipate or shall we do what April look like. April margins are well on track, back at the level of 15% plus, which is what we used to have in Q3 last year, the first quarter of the acquisition. So the US situation seems to have been resolved. It was a one-off impact due to the bad weather, due to the surge in metal prices, due to the weakness of the market and some pricing behavior of different competitors. March has restored the previous trend, and April has set probably one of the best months ever in the anchor wire perimeter ISC North America. Specialties. Sequentially, we show a significant improvement, 59 million quarter 424, turning into 74 million. Average margin, standard metal price growing a couple of points. Year on year, we are still down on the strong quarter one that we had last year. And we also did comparison quarter two, where quarter two last year was pretty strong. But the 74 million on quarter one, 25 is paving the way for some growth in quarter two and the coming quarters. Digital solution finding a significant improvement. Digital solution organic growth posted at 3.4% year over year. 32 million turning to 42. Aveda margin significantly improved from 10.8 to 13.2. We are still not benefited from pricing recovery in the market, or we have some mild pricing recovery in our backlog. But in the order intake of these months or these weeks, We see significant high level of prices, which we will turn into revenue and maybe done in quarter two, quarter three and onwards. The market is super strong in the United States. So demanding that we're struggling with our local capacity by complementing our local output. with the imports from different places to maintain our share of wallets with American customers and follow the demand growth in the market. As said before, we have significant improvement in the circular economy KPIs, climate ambition on track to deliver the 30% target for 2025, and the social mission is well positioned in line with our goals of 2025 and the capital market goals. Let me move to Francesco for the financial insight.

Thank you, Massimo, and good morning to everybody. The usual recap of our profit and loss revenues reached almost 4.8 billion, of course, including the change of perimeter coming from the consolidation of anchor which was not there in q1 2024 organic growth pretty positive very positive i would say at five percent certainly driven by transmission but with also a good solid stability in agency and and power grid and a growth actually in digital solution as massimo said very strong in in north america uh good news also from the start of the year on the ebda the adjusted ebda 527 you appreciate as massimo commented the margin expansion if you look at the percentage on revenues at standard metal prices from 12.4 to 13.1 there are many good elements in this margin expansion certainly the biggest factor is the strong expansion of margins in transmission but also margins in the power distribution the power grid space are holding up pretty pretty pretty well in terms of net income the landing point group net income is 150 It is certainly affected by the growth of the financial charges to 73 million, which are, however, in line with our expectation and fully reflecting the impact. of the acquisition, and we have a temporary negative effect, which is on this non-monetary item coming from the negative fair value of metal derivatives, which is sometimes a quite usual element in our profit and loss. It is temporary, but it is weighing a bit on our Q1 2025. We can move quickly to the cash flow. You see here, as usual, is the bridge from March 24 to March 25 of our net debt, which is, of course, resulting in the last 12 months free cash flow. So you see the move of net debt from 1.7 before anchor acquisition, of course, to the current 4.8, 4.9, affected by the acquisition effect, almost entirely anchor, affected positively by the net of the convertible bond debt. conversion which took place in the between June and July last year and the share buyback for a positive net effect of 357 and you see the pretty powerful free cash flow that we have generated in the last 12 months which is a at the 1 billion level and substantially in line with the full year 2024. Of course, this still benefits a lot from the working capital changes, a drop close to 500 million. We may have some different distribution here throughout the quarters, because you appreciate that the cash flows of the transmission business in particular are depending on milestones, are depending on down payments, so they never distribute equally over the quarters. But this is a very good start on track with our 1 billion midpoint of the full year guidance. Thanks a lot and I give it back to Massim.

Thank you, Francesco. Let me move to the guidance. uh we are still in the position to be pretty confident about this guidance with a midpoint at 2.3 billion uh despite some as you know uh turmoil in the american footprint uh but the the signs the signal from the market the customer wise in u.s are pretty strong they see market demanding in terms of investment, see the market demand in terms of cables for electrification and for special business, telecom business I commented before. So we are in a position to confirm the midpoint of the guidance. Of course, we have two effects. One, that we expect to close the deal with the channel towards the beginning of June. So it will be before the end of quarter two. So we'll have a the full impact of a semester of China in our revised guidance that we will probably share with you in July. This is a great positive news and opportunity. On the other hand, we have some headwinds that you can expect in terms of Forex, dollars, euro exchange rates. For quarter one, we've been pretty much immune, but at the current level, if this current level of exchange rate continues for the remainder of the year, we might see some some additional headwind. We will be, in July, in the best position to revisit this guidance, including the business trend impact, which is positive from what we see, including the channel perimeter change, and probably including some adverse impact from the Forex exchange rate. Free cash flow confirmed at 1 billion for the full year. So we are super, super satisfied by the performance of transmission, which is also our important pillar for the Capital Market Day. Our journey from 2.1 billion performer in 24 to 3 billion plus in 28 relies a lot on transmission and the fact that in quarter one we have expanded the business, we have expanded the margins, We had still a significant backlog that will help us navigate the next four years without resulting to additional order intake to confirm our target makes us super confident that we achieved the 3 billion level mark for 2028. The cash flow generation is always, as usual, an important strength of this company. It will continue to remain an important strength of this company. China position, I told you, is on track. We look forward to initiating and starting integration from June onwards and making a common ground, creating the common opportunity to turn the telecom business in the United States into a digital solution business with the connectivity and cables. And so the 25-hour loop is confirmed. And in July, we'll have a revised view for the full year. Thank you for your time. I think we can open to your Q&A session.

Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To answer your question, please press star one and one again. We will now take the first question from the line of Daniela Costa from Goldman Sachs. Please go ahead.

Hi. Good morning. It's actually Ilaria here on behalf of Daniela. So a couple of questions. First one, on power grid, if you could provide some color on medium voltage versus HVAC performance, and also if you can comment a bit on what you saw in U.S. versus Europe. And then on the wait and see you saw in the U.S., was that more on HVAC or on medium voltage? And then the second question is if you have done any pre-buy during the quarter and if you've seen any pre-buy from customers. And so what we should expect as a consequence for free cash flow conversion. Thank you.

Thank you, Daniela. So power grid, some more color. The organic growth is a little bit negative because last year in quarter one, we had a significant strong demand in volume and price in the overhead transmission business in U.S., which has now in quarter one, but also in quarter three, quarter four, not as strong in price, but also in volume as it was in the past. Medium voltage-wise, the demand is still very strong to the point that you know that we have approved two months ago a significant investment in medium voltage in the U.S. and McKinney to both serve the INC space and the power distribution space. The latency was about the fact that in quarter one we had some Negative impact from the usual bad weather. We had a couple of factors that went on stop for two or three days. Customer could not really start installing cables due to the soil condition. The wetness was about this situation. In March, as soon as the high season, the good season started, we saw this rebound in medium water demand. Overhead transmission line, we have a kind of full coverage of 2025 in terms of backlog. So we are doing pretty well in this space in United States. As far as you're concerned, demand remains scattered with a strong demand in North Europe, strong demand in UK, strong demand in Spain, weaker demand in France. So a different situation. But overall, we are, you know, this year we will have the new capacity installed in Europe coming on stream. And this line is already full saturated through the rest of the year. So there is stronger situation across the board. Remember that in this space also we have a medium, sorry, low voltage cable that remains a weak segment of business across all geographies. On the other hand, in the same space, probably we have a high voltage business, which is, I'll say, super strong, super demanding to the point that we are not able to catch up with this demand. And we are about to decide to make a second investment in Europe for additional capacity. INC US versus Europe. The US, I mean, you know that we were scared by US performance in January and February. But we knew that was something specific, one-off, related to a negative combination of many factors. The weather, the low season, the behavior of some competitors in the US. and the sharp increase of the copper price. The situation has completely changed. In March, the behavior of the other players became more reasonable. We placed many price increases in the market in March. They've all been followed suit by all other competitors. And in April, we continue along this trend. Europe remains also here a scattered situation. We have a genetic demand good in terms of industrial commercial project, some stability with some good spike of demand in residential market. Pre-buying, I mean, we have not seen pre-buying in US, which is where we expect things to be exposed to tariff impact. But we've seen customers that are walking away from the usual importers channel in afraid of being hit by tariffs in the future. So there's been no additional demand in the market. There has been some of the customers that used to buy from importers shifting their demand towards local players, Prismian and the others, of course.

That's clear, thank you.

Thank you, Ilaria.

Thank you. We will now take the next question from the line of Akash Gupta from JP Morgan. Please go ahead.

Yes, hi, good morning, Massimo, Francesco. I have two questions as well, and I'll ask one at a time. The first one is that I see that you are now moving to margin in constant metal price, which I guess makes sense as it removes impact from swinging metal prices. But can you tell us what does the new normalized margin will be in constant metal prices? I mean, previously you said you target 18% to 20% in transmission, 12% to 13% in grid. So how do they translate into a new margin definition, and where does electrification margins are going to sit on constant metal prices definition? So that's the first one.

Okay. As far as transmission is concerned, the impact of metals, standard metal prices versus current metal prices, not that much because, you know, in transmission there's a little quantity of metal and there is much more quantity of other material and installation activity. You've seen this in the quarter one where margin at current was 16.6, margin at standard was 16.9, so no big deal. So we confirmed that in the mid-long-term target, so the capital market target, when we mentioned to you that it would be averaging around 18 slash 20%, you should probably ask the point to this target to recognize the effect of the standard meta margin in the transmission space. On the contrary, In the INC space, the differential is pretty high. I think we should consider a couple of points, an incremental couple of points, 200 basis points additional, if you convert it from current metal prices, current being quarter four, quarter one, 25, into standard metal price. The level of copper in standard metal price is $5,500. The level of aluminum is 1,500. The level of lead, which is a minor metal, but we still buy it, is $2,000 per ton. And so you can make the comparison to the current metal prices. I'll give you another additional hint. So the famous anchor wire 15% EBITDA margin at current price We're really close to 19 as standard.

Thank you. And my second one is on opportunity of market outperformance in the U.S. in electrification market. I mean, when we were at the Capital Markets Day, you talked about how Encore is complementing your offering and making you a full line supplier for all the types of cables that are required by distributors. So we'll be soon approaching to one-year anniversary of close of ENCODE deal, and I wanted to get your thoughts on have you started to see any increased traction from distributors that may help you gaining market share, given now you can supply literally all type of cables on both copper and aluminum conductor. So any thought on market outperformance that we should see in the remaining part of the year? Thank you.

Thank you. Actually, if I understand the question, it's about the opportunity to sell more to distributors and the opportunity to leverage other synergies. We're talking about the same stuff. We had already geared up the commercial organization, which basically is what we adopted from the AnchorWire acquisition. The agents who print AnchorWire is the new commercial organization in entire INC space in the United States for Prismian. We already geared up these commercial organizations to sell our products, not just the anchor wire products, so the copper and aluminum building wire, but also medium voltage cables, industrial cables, portable cords, electronics. Most of the stuff we already either relocated in terms of production and McKinney, or we are at least relocating in terms of service, in terms of distribution center to McKinney. This is helping us deliver products from McKinney across the entire INC portfolio of products, the best service level. So what we noticed is that customer has recognized, even recently, that despite some, let's say, contingent difficulties in the first two, three months in terms of maintenance, maintaining the same service level, in the last four months, our service level has been impeccable. They all appreciated the 24 hours delivery. Most of the month revenues, the month revenue are from stock. And most means 70% are from stock with 24 hours. This advantage that used to be applied only to copper and aluminum building wire now is applied basically to the entire portfolio, almost to entire portfolio products that we deliver to the ANC space. So this is the rational, this is what we're gonna leverage to achieve the cross-selling opportunity and the pricing improvement associated to the integration of the two perimeter. I hope I answered the question, Rakesh.

Thank you, Massimo. Thank you.

Thank you. We will now take the next question. From the line of Chris Leonard from UBS, please go ahead.

Yeah, hi there. If I could just ask a first question to clarify the electrification business and encore why you're saying that. you've already achieved sort of 15% margin in April. I'm just wondering if that's also true. Are we seeing an improvement in the legacy IMC margins as well, excluding Encore? And if so, has that been driven by high demand for copper wire or aluminium wire? Or is that actually also from better pricing behavior that you commented on for competitors? Thanks.

March and April benefit from all those factors, Chris. There is additional volume in the market, given the start of the high season is a quarter of March and quarter two certainly sets the start of the high season. So more volume in the market, more demand. As I said before, there is some custom already shifting their supply chain from imports to local players. So this is also determining and impacting the additional demand, we had better prices, no doubt. We had better prices because on the one hand, copper and aluminum have stabilized a little bit in terms of level of price increase. We could, with the price improvement set in the market, fully offset their cost, which this was not the case in January and February for copper and aluminum business wire. and actually go beyond setting their costs. So this level of profitability is, now back to the level we had before, it is not just ANCOR to answer your question, it's also the rest of the INC perimeter, which tend to be less visible, less, how to say, it's more difficult to carve it out because most, so the entire copper production legacy prism has been moved to ANCOR. Most of the aluminum building wire that we still produce in our site, Legacy Prisma, we are delivering to customers through ANCOR. So the two perimeters are fully becoming very blended. And so the overall margin is in line with what I tell you about the ANCOR wire margin.

Okay, thank you. That's very clear. And maybe a second question tying into electrification, but also maybe on power grid. What are you seeing for indications of higher pricing on aluminium? And is that being able to be absorbed across the market and and what if you can maybe update us as well on on the sort of percentage exposure for aluminium on uh on the new inc uh divisional structure with encore included and equally on power grid just to give us a flavor of of that that shift to more local players and how that will impact revenue growth thanks yeah i will address first power grid where the the the midwest premium so the extra costs are represented by tariffs uh

is part of the formula in existing frame agreement contract with the customer. So this is a simple pass-through. As far as the aluminum impact into the electrification, so INC space, we send the Midwest premium reflecting the impact of tariff even before tariff had been put in place. So from end of January onwards, we had seen Midwest premium increasing. We have been able to pass it on to the market because this is a common situation across all competitors. Satwaya, ourselves, we all needed to sell aluminum from production plants that are located outside of the US. And so tariff has become higher. normal part of the cost. Of course, this will create more inflation in the cable space, in the activities where cables are required for investment in expansion of the grid, for investment in connection of the building and so on to the grid. But so far we don't see, we didn't notice any slowdown of market demand due to the incremental costs associated to

metal metal increase due to tariffs okay that's great thanks for all the color super clear thank you you're welcome we will now take the next question from ching wang from barclays please go ahead Hi there. Thank you for taking my question.

I missed it.

Sorry about the noise. So my first question is on power grid. I'm not sure if it's already, but we've seen very resilient margin compared with, you know, some concerns on margin softness discussing the U.S. market last quarter. Do you still view the 12 to 13 percent as the right margin range, please?

We've seen resilience, yes. Maybe it was too negative last time when I mentioned a range of stabilization of margin in power grid between 12% and 13%. I think in standard terms, in standard meta prices, we see this level of between 14.5% and 15.5% or 15% midpoint stable over the coming quarters. because the drivers are the same drivers. And in power grid, not necessarily this year, but very significantly next year, we will see an uptake in margin represented by the additional HVAC volume delivered to the market from our additional capacity. 15% level is what we expect to see in the coming quarters.

Okay, great. And if I can just follow up on the power grid. So my next question is, was there any frame agreements due for renewal in the quarter? If so, was there any change on the price and duration of the agreements or any terms and conditions?

There are frame agreements and renewal every quarter in U.S. as well as outside the U.S., But as we all understand, even if they went out for tender, it is very difficult for a customer to shift from supplier A to supplier B, especially supplier A has been excellent in terms of service level, in terms of reliability of delivery, in terms of quality, in terms of technological capabilities. So we, in the current frame agreement, have been renewed in quarter one, And what we see for quarter two, we haven't seen a particular price pressure from the market. It is true that capacity coming on stream from all players, but it's equally important to know that once you gain an important leadership position in terms of share a wallet with a customer, there is a lot of resilience from this customer to share from a different supplier. thought from from you to a different supply. So we haven't seen pricing deceleration in the new frame agreement. On the contrary, our ability to keep adding stuff to the cables, like the monitoring devices, like the assessors like a day, partial discharge and measure. So there are a lot of stuff that you add into cables to make our offer kind of unique. So this is helping us When the market is weak, stand the possible pressing pressure. When the market is strong, it is to further build additional volume and opportunity.

That's very clear. Thank you very much.

I'll go back to the queue.

Thank you.

Thank you. We will now take the next question. From the line of Monica Posseo from Intesa San Paolo, please go ahead.

Good morning, all, and thanks for taking my questions. I have three. The first is still on power grid, sorry. The start of the year was with a minus 2% organic decrease due to the tough comparison base. So should we expect the organic growth could turn positive from second half when the new capacity will come in fourth? And If I'm not wrong, within the power grid segment, the weight of the low voltages is quite low, 20%, 25%. If I'm not wrong, low voltages are weak. Why should we expect a recovery also in low voltages within the power grid segments? This is the first question. The second one is on transmission. The plus 50% organic growth in the first quarter was materially above the market expectation. Should we expect similar progress also in the next quarter? You guided for a 17% margin. I'm just wondering what could be the incremental adjusted EBDA in absolute term by year-end for transmission. Yeah. And the very last is on the competitive environment in industrial and construction. Now you increase the pricing, the volumes are up, but any color on the competitive environment and the pricing discipline within the segment would be useful. Thank you.

Thank you, Monica. Tough question, comprehensive question. Well done. So let me try to answer one at a time. So Pava, Greeder. Organic growth negative by 2%. The growth, as I said, is a tough comparison due to the overhead transmission business, particularly stronger in some projects in the US in quarter one 2024. We see organic growth in the coming quarters in the wake of an additional capacity, but also the additional of the strong season ahead of us. It would not be a 10% organic growth. It would be in the range of a mid-single-digit organic growth increase. Bear in mind that in quarter four last year, we had a significant growth in power growth. So whether we'll be able also in quarter four this year to maintain additional growth year-on-year over quarter four, we will see. But quarter two, quarter three, you will see organic growth turn into positive. The voltage has been very weak since several years. The reason is not that simple for us to understand, to clarify, but certainly the demand of electricity, driven by all the use cases that you are very aware of, is affecting much more high voltage AC space and middle voltage space than it is with low voltage. It's not that the demand is declining, it's not just growing. while the demand for medium voltage and HVAC is stronger in order to transmit more power and more quantity of energy to feed electricity to the different users. So I don't expect recovery in the low voltage space. Transmission, yes, super fantastic. We are super satisfied. 60% was not conceivable a few quarters ago, But we did very well in terms of execution and in terms of benefiting from the high margin projects and the additional installation capability thanks to the new vessel. This confirmed that our strategy to invest both in manufacturing capacity and installation is really paying dividends. And different from what many competitors, actually all other competitors have decided to do. So to focus only on manufacturing. Installation is an important part of the EBITDA margin increase, an important factor that drives organic growth increase. The full year EBITDA, you know, we know it. It is well defined because we have the back of the hand. Last year we delivered 360 million. I didn't mention at the Capital Market Day what the EBITDA target is for 2028, but I gave you many, indication to allow you to figure this out. So we have to exceed the 100 million target by 2028. So our journey from 360 24 to 100 million plus in 2028, goes through a significant increase in 2025. In the region over 100 180 170 million, green given driven driven by the same factor that you see in a quarter one execution Capacity increase across the board, so manufacturing and installation, and better marginal portfolio.

Perfect. I'll do my math. Thank you. And then on the power, yeah.

No, right. Sorry. I wanted to. So you want me to answer the third question or you want to go back to power grid?

Yes. Yes, sure. Sure, Massimo. Sorry. Okay.

Okay, so the question was about the competitive environment in INC. Yeah, we had some undisciplined behavior, let me say, in January and February, which were fully recovered in March and April. So the whole market became more disciplined. As I said, the price increases that we set in March were free. The whole tree stuck into the market. So we had... maintain the price increase set every single time and cost and competitors of all of them this also is recognizing our power in the market in terms of leadership in pricing and also recognizing our longer our large position versus our partner channels distributors and also recognizing that some of the some of the smaller distributors that used to buy products from imports are shifting to demand to the local suppliers. And this is the indirect benefit or the possible threat represented by tariffs, which are not yet in place anyway.

Yes, agreed. Thank you very much, Massimo. Thank you.

Welcome, Monica.

Thank you. We will now take the next question. From the line of Uma Samlin from Bank of America, please go ahead.

Hi, good morning everyone. Thank you so much for taking my question. My first one is a follow-up on the electrification margins. You mentioned that the behaviors in March and April have returned back to what you saw last year. Does that mean that your electrification margin is likely to return to a similar level of last year, something around like 9.5 to like 10.5% of margin profile. And another one is on ANCOR that, you know, do you see any scope for the ANCOR margin to return to the previous like 20% if you see any pickups in U.S. construction? And my second question is on the founding of the channel acquisition. Would you be able to give us an update on the plans in terms of the mix of treasury shares and the sale of the shares of the YOFC? That would be great. Thank you very much.

Thank you, Uma. So let me comment on the anchor wire margin. March and April is in line with last year. When I mean last year, if you take... I mean, the first six months were not known to you because we didn't consolidate ANCOR until July. Quarter three last year, the EBITDA margin of ANCOR or INC North America was more or less the same at 15%. So when you mention this 20%, I don't recognize it. The margin of ANCOR were even higher than 20% when we are talking about 2022-23. And also our INC margin was pretty high, driven by the significant increase scarcity of products due to the disruption of supply chain, scarcity of raw material that we added due to the inflation that U.S. was exposed to in late 21 and the whole of 2022. So from that moment onwards, EBITDA marginal at Anchor and Prisman perimeter had stabilized at 15%. Let me say from first, second half, 23 onwards, And we had this deep in margin in November, December, January, February, November, December 24, and January, February 25. March and April has restored the level of 15%. So we are back to where we were, thanks to the strong demand, thanks to the behavior of our competitors, and also thanks probably to some tariff, indirect tariff benefits. The 15% current margin, means the 19% standard metal margin that I mentioned before. So I don't want you to get confused now from now onwards. We will report the standard margin. So margin is standard metals. So the original 15% of anchors based on current margin will turn into 19%. The 19% is the level that we confirm from now onwards. Funding of channel acquisition. I'd like to hand over to Francesco for more detailed explanation.

Thank you, Massimo. As we said, as Massimo, by the way, anticipated, we certainly add to the closing of Channel in the first half, end of May, beginning of June, we will see. It will be a balanced mix of debt and equity or equity-like debt. And the important thing to register is that it will be absolutely consistent with our investment grade. Okay, that's the important point. Of course, there is a timeline. It's not that we have to do this entirely at closing time. It's important to keep this financial position balanced throughout the year. We mentioned the instruments. We will resort to certainly the hybrid bonds, the subordinated bonds, which is currently pretty strong in terms of market after some, let me say, weaknesses that we saw in the market, I mean, a few weeks ago. I think that now the market is back and pretty much in good shape. You saw, by the way, that we have activated some, let me call them, equity-like tools. such as, for instance, we decided to go for a placement of our YFC stake, this is also a way to finance the transaction, which is, as a matter of fact, equivalent to equity in principle. And of course, this is also an instrument to do that. What I can assure you is that we will certainly minimize the dilutive instruments. This doesn't mean that they will be zero, of course, but we will certainly minimize any dilution for shareholders, keeping our financial structure totally in line and consistent with the investment grade.

Thank you, Francesca.

That's very helpful.

Thank you very much. Thank you. We will now take the next question from the line of Miguel Borrega from BNP Paribas Exxon. Please go ahead.

Hi, good morning everyone. Thanks for taking my questions. I've got a few. So first on transmission, I was wondering if you could give us more detail on the margin performance of Q1. You mentioned execution and better mix. Is it because of some specific project that started to kick in or is it because you're delivering ahead of your initial budget? And how much visibility do you really have ahead of the quarter? I ask because these projects usually have an estimated margin, and one quarter, though, you were guiding to 16% or slightly above 16% for the full year, and now you're saying 17%.

Thank you, Miguel. Well, you know, when we plan, when we provide your forecast, we tend to be conservative because we want to make sure to beat it. So that is probably the reason why we plan for sustained and we deliver 17. But being specific on quarter one, yes, we had an execution in line with the expectation, in line with the margins of the project. And we have some better margins projects in our back, like at Eurelia Linka and some others. So let me not be specific, because I mean, our customers also listen to the questions. And we have great visibility of this transmission business, because the 17 billion backlog provide us these benefits, not only for the coming quarter, but for the remainder years through 2028. That's why I can't easy to confirm that if you continue with this current pace, which I don't think will be difficult to do, we will achieve a 17% plus EBITDA margin for the full year.

Thank you. And then, big picture, you saw yesterday Orsted cancelling Horn C4, complaining about higher costs, etc., And I know you've been involved with Hornsey 2 and 3. The political environment is also a little bit different in Europe. So how likely are we to see further cancellations in the European pipeline? Not yours specifically, but more generally. And can you give us some thoughts about the size and number of awards going forward? Would we see your backlog, for example, growing again? Or do you think it has peaked?

We have seen what you mentioned. There is certainly some pressure on some offshore business, more than anything else. It's a business that is not relevant to us, but you're right, in terms of project by balance, the inflation might cause some readjustment of the timeline of the permitting of some of these projects. So far, we still see a significant increase long and reliable list of pipeline projects ahead of us. We are confirming, we still confirm the market size for 25 billion in the region of 15 billion plus. There are many awards. There is the IPTO Greek player playing the frame agreement. There is RTA, there is National Grid with equal three, equal four. We are meant to improve our backlog, slightly improve it, because we don't want to exaggerate, as we probably did in the past. Too big of a backlog doesn't allow us to play the proper role across all the customers for the new projects. But undoubtedly, given the current 15 billion intake that we see for the market in 2025, And given that we will consume probably 2.5 billion, 3 billion of our current backlog for the execution of the revenues in the coming quarters, you will see at the end of this year an increase, a marginal increase to our overall backlog.

Okay. Thank you very much.

Thank you.

Thank you.

We will now take the next question from the line of Lucas Serrani from Jefferies. Please go ahead.

Good morning. Thanks for the question. Could I ask about the trends you're seeing for electrification, especially INC in April so far? Are you still confident about the improvement you've seen in March?

Yes. When I commented March, I also commented April because April is for us now a month that we already closed. the margins progression was strong in March over January and February. In April was even stronger than March. So April has confirmed that the discipline behavior competitors, the sustained demand for the market, the high season has reestablished very high level of the margin in the United States. So in current terms, current metal terms at 15%, in standard metal terms close to the 19% that is the level that used to have in the quarter three last year when we first consolidated anchor in our perimeter. So April is reassuring, comforting, and setting the scene hopefully for a good quarter two.

Thank you. And generally, when we look at the full year, given the start you had, I remember I think in Q4, when talking about INC margin into 2025 in current terms, You're talking about maybe 10.5, 11, or maybe even 11, above 11 possible. Where do you think you end up now for the full year, given the information and the visibility you have now on margins?

Yeah, I think we have to distinguish where you talk current or you talk standard. Standard metal costs, standard metal prices, sorry. The level of the level of 13% is for the total group margin is what is what we can think of achieving. So if you take what the one is 11.6, there is definitely a good good cup one and a half to two points in place. uh for the for the folia for the remainder or the the folia folia average we will see but the the coming quarters two and three and four uh suggesting line of what we see in april that we can achieve the level of 13 7 13 5 13 5 for the full year thank you and a quick follow-up just on on offshore wind obviously we've seen the

The stop order on Empire Wind, obviously you're working on coastal Virginia. There hasn't been any announcement there yet, but can you give us an idea of how much left do you have to do on that project? Is it the cable manufacturing now done? Is it just installation? And roughly in 100 million euros, what would that be in terms of revenues?

It's not much of what is left to be done. We had completed the production. We have finalized installation. It's a few tens of millions what is left to be done in terms of value.

Perfect. Thank you.

Thank you. We will now take the next question. From the line of Xing Wang from Barclays, please go ahead.

Hi, thank you again. So my next question is on the financial item. So net income is lower this quarter, and part of the reason was this 55 million euro loss on commodity derivatives. Can you maybe elaborate on this, please? Was there a change in how you do hedges in Q1? Or maybe there's... some level of speculation on metal prices. How should we think about this line going forward?

Thanks for the question. Thanks for the question. It's quite the contrary. We are fully edging And for this reason, we don't manage for some technical accounting reasons to achieve an edge accounting treatment. And exactly for this reason, we have some metal, some significant metal derivatives, which has always been the case in the past. which fluctuates on our profit and loss in terms of fair value of these derivatives change. And this is a temporary impact on our profit and loss, by the way, non-cash impact on our profit and loss, and it will basically stabilize or disappear throughout the year. So no concern on that. No speculation at all, just to be very clear.

Okay, excellent. Thank you very much for confirming. You're welcome. So my second question is on the high voltage demand. So in April, Texas approved $10 billion spending on 675 kV transmission lines. given Texas is basically your home base in the U.S., I assume prison is very well positioned to address this demand when it comes through. I think it's still early stage, but do you have thoughts already? Would you need to build a new capacity? And how fast can you get your facilities qualified for 675 kV?

We have qualification for the level of technology, of course, in the U.S. and also elsewhere. We see the U.S. committed to investing more in the grid. HV is one important piece of the grid. When we talk about HV in the U.S., it's both underground cable and overhead transmission. And we are pretty positive about the opportunity that we'll see in this space. Also, considering that part of this market is served by Koreans, And should the tariff be one day implemented, most of this market will be restricted and limited and confined to local players. So that would be an additional opportunity to take advantage of our local presence in the U.S. and local technological capabilities in the U.S.

That's very good to know. Thank you for that. My last question, if I may. So power blackouts, these were very rare in developed markets in the past, but are happening more often recently. What can Prismian do to enhance grid resilience? What are the commercial opportunities out there for Prismian?

What we can do is very simple. We can offer more cables because what is actually missing is a Utilities investing more in connecting the local grid, the country grid, with the adjacent neighbor country grids. This was a weakness. We know that it was a weakness in the energy footprint of Spain. It's less, it's more reliant on local generation than it is on the integration, the interconnection with adjacent countries. This is a completely peculiar situation in Spain, different from many other countries in Europe, which have at least 30% of their energy demand connected and supplied by other countries. So the opportunity for us is important because there will be more interconnectors if they wanted to resolve the problem in a structural way. There will be more cables interconnecting Spain with other countries, either via land, so underground cables, or submarine cables. It's a new opportunity for additional stream of revenues.

Thanks very much. The one thing we didn't probably touch on is digital solutions. Can you maybe update us on the demand and price insurance in Europe and U.S. markets? Has the first four months progressed as you expected? How should we think about coming quarters?

Yes. Thank you. The demand in the U.S. is very strong. The standard has taken us by surprise. We haven't realized that there was a significant surge in demand. We struggled to respond with a local capacity, and we are using other factories, European factories, basically to supply and top up the local production in the U.S. The demand remains strong because It has been very weak over the last two years due to the stocking more that the US customer entering to after the big buying that happened in 2022. So coming quarter, we'll see this demand remaining pretty solid. And hopefully, we will see pricing improving because the demand overweighs the available capacity. So there will be tightness in the supply chain. Europe is, on the contrary, not as strong. It's stable. Most of the countries in Europe are more advanced in terms of Fibre to Dome rollout. We don't have yet in Europe the additional stream of activity resulting coming from the data center expansion. There are data center implementation in Europe, not to the level of what we see in the United States. So stability in Europe, pricing also stability in Europe, volume opportunity in the U.S. with pricing opportunity in the U.S.

Really good to hear.

Thank you so much.

Thank you. You're welcome.

Thank you. We will now take the next question from the line of Alessandro Tortora from Mediobanca. Please go ahead.

Yes, hi. Good morning to everybody. I have three questions. The first one is if you can come back a little bit on channel, if you can comment also on, let's say, about the triggers behind the turnout mechanism and I recall a very high profitability of channel, almost 40% EBITDA margin. So if you can help us understand if, let's say, the payment of the announced is more linked to a top line, top line acceleration you see for the current year. So that's the first question. Let's say the second question. Ario, please, if you want to go ahead, please, thanks.

So channel is now mechanism is... As you see, based on a base project, baseline price of $150 million, plus a range of up to $200 million, all this is related to the EBITDA performed in 2025, for the full year performance of 2025. Based on the range of EBITDA, the $150 million can grow as high as $1,150,000. They are doing well. They did well in quarter one. They are, let's say, well positioned to benefit from the market rebound also in the connectivity space. We anticipate a good quarter two also. And then we see what quarter three, quarter four will look like. At that point, we will have them embedded in our perimeter. So that is the mechanism of the year now. I don't know whether that's enough, Alessandro.

Okay, sorry, the line was not fantastic. You said in terms of EBITDA up to 150 euro million, sorry.

No, the price mechanism is based on a 150 million minimum price, on top of which there are 200 million of price increase if they achieve certain thresholds, certain targets of EBITDA. So the earn-out price is based on the EBITDA achieved at the end of 2025. For the time being, the EBITDA is doing better than last year. Quarter 2 is expected to be also positive, and we'll see what happens in the second half of this year. Okay, okay, thanks.

And then the second question, okay, I can crunch the second and third one. If you can give us a full identification for DNA, for the QLIA, considering the 150 million level in Q1, and also financial charges for the QLIA, thanks.

The DNA is quite simple. I think if you make times four is... a pretty good projection because we have now the full impact also of the amortization related to the price allocation of ANCOR. So it should be quite linear. And for the financial charges, the indication that I can give is for a total of 260, 270 million for the full year. Not very different from a Times 4. So in this case, a bit lower in this case.

Okay, okay, thanks. Welcome, Alessandro.

Thank you. We will now take the last question from the line of Luigi Debellis from Equitasim. Please go ahead.

Hi, good morning. I have three questions, if I may. The first one related to the transmission business. Could you elaborate on the potential pipeline of a new project? How has visibility evolved compared to three months ago on your target market, so mainly TSO and Europe? The second question, the new tariff introduced by U.S. administration are creating and will create significant disruption that could lead to a shift in global manufacturing flow. So, Do you see any risk of increased competition from Asian players in Europe or in specific segments of your business? And on the other side, could you elaborate on the trend you mentioned of shift of your customer in the U.S. as a positive indirect impact from tariffs? And the last question regarding data center, how is demanding evolving looking to your side and have you observed any changes in the trend based on your current visibility? Thank you.

Thank you, Luigi. So transmission pipeline is, yeah, we have the usual visibility. We have at least three and a half years worth of projects in the pipelines with names, surname, with definition of the routes and all the rest of So we have received through 2028. Of course, important to understand that when this project will become attendance, and that will become order intake. So we have a great visibility of 2025 in terms of tendering activity, because it is actually acting, acting and happening as we speak. And we also have visibility of some tenders that will be released into the market in 2020 2026. As far as the tariffs are concerned, yes, there is a little bit of uncertainty as to what is going to happen at the end of these 90 days. You know that those 90 days commenced on the 10th of April, so through the 10th of July, There is this suspension of the tariffs, and then we'll see what happens next. What we notice is a behavioral change in local customers, as I mentioned before, trying to shift away from the current supply chain, offshore supply chain, so shifting to local producer. I didn't see any increase in aggressiveness in the European coming from those players redirecting their supply to European customers. I haven't seen any changes, any indication coming from the market. As far as data center demand, we see still no changes. Demand is pretty strong. We are gaining position in this space because now we leverage the portfolio, the synergistic portfolio, especially in the US. And in Europe, we are weaker than we would like to be that we should. So we should be more effective. So we are working more with close with potential contractors. Because while in the US, the data center market is traded through distribution, and we have a strong position there, in Europe is traded through contractors. So we're gaining position, we're gaining share in this space, thanks to our new relationship with these contractors. But in terms of overall demand, we don't see changes. Thank you, Massimo. Thank you. Welcome.

Thank you. There are no further questions at this time. I would like to turn the conference back to Massimo Battaglini for closing remarks.

So thank you for your time. I hope we appreciate it together, this satisfactory quarter one performance and look forward to talking to you at the end of quarter two with similar understanding performance thank you very much