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.