Prysmian S.P.A. Ord

Good day and thank you for standing by. Welcome to Brisbane Q1 2026 Integrated Results Webcast and Conference Call. 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 and 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 and 1 again. Please be advised that today's conference is being recorded. I'd now like to hand the conference over to Massimo Battaglini, Chief Executive Officer of Britain. Please go ahead, sir.

Thank you. Good morning, everyone, and welcome to the audience of Quota 126. We're very excited to to share a quarter one result that is well ahead of our expectation. And when I say well ahead, I mean almost 50 million upside over what we budgeted for quarter one, 26. But what is mostly is that the growth in EBITDA between quarter one, 25, 26 is being mainly achieved organically. If you take this 80 million increase and you harmonize and utilize the Forex, This will lead to 120 million growth in EBITDA, out of which Chandler represented only 40 million of these 120. Also outstanding is the EBITDA margin reported, 14.2%, 1.1% a point higher than what we recorded for last year. So with this set of results, we can confirm that we are well on track to achieve the 2028 capital market day target of 3 billion and plus, and also very confident to be able to hit the upper part of our guidance for 2026, namely well above the 2.7 billion of the midpoint. Before moving to the usual by business review, I'd like to share with you some exciting news about the further expansion that we can have in the data center space through starting long-term agreements with hyperscapes. These agreements are going to be finalized in the coming weeks, and instrumental and fundamental to achieving this agreement is our footprint in terms of product and asset that we have in the U.S., We are among the few at fiber plant located in the U.S. with multiple optical fiber plants located in the U.S. We also very satisfied of being the only player worldwide that can offer data solution and power solution to hyperscalers. The demand has grown to the roof in terms of fiber and optical cables. not only coming from a strong defense center structure, but also coming from the famous and well-known case of military fiber utilized for drones application. So we are well positioned to take advantage of the growth of the market in terms of volume, profitability, and long-term supply agreement that will confirm how sizable this opportunity is for opening. Being unique means also that we participate In all the steps of the data and power flows of cables to feed optical solution and electricity data center, you see that all our business, transmission with submarine telecom and submarine power, power grid with medium voltage enhancement to the grid, electrification cables, and finally digital solution cables, are intercepting, will intercept opportunity with data center. And the last one that we want to capture is to be a player, not only with a long-haul connection, connecting data center campus and cluster of campus with other cluster of campus, but to be a player also inside the building, inside where the racks, the servers are, which is where most of the volume of cables and fiber is going to be deployed due to the AI expansion. Let me move to the business review. Supported the quarter one with 23 million upside over quarter one 2025. The organic growth is not that visible. In fact, we had growth, but made of two components. Some growth in the cable space, so the capacity coming online will bring an additional volume. to this business. We had lower installation, third-party installation in quarter one than we, due to the phase of a specific project. And bear in mind that we have also tough comparison to quarter one, 25, where we had a 60% organic growth in that quarter. But, look at the EBITDA margin. We are consolidating for the second quarter in a row, 20% plus EBITDA margin for this business. I confirm that we will see a between 20% and 21% EBITDA margin in 2026 full year, which is well ahead of the target we set for the capital market day, which was a range between 18% and 20%. More importantly, I confirm our commitment to achieving at least 170, 180 million incremental EBITDA in 2026 or 2025. confirming that we are well ahead of our trajectory for achieving the 1 billion goal for 2028. Moving to power grid, we have an exceptionally and extraordinarily high organic growth driven by volume and price. In terms of EBITDA margin, you see what we anticipated last quarter. We still have Midwest premium and cost inflation that we are passing on to the market because we have formula across all the agreements. But bear in mind, those formulas are structured in a way that they give us an upside only after a certain time lag. So there's a time lag for the implementation of the formula. whereby the cost increase today in the market, in our production, is something we can pass on to the market in basically three months. This is preventing us from restoring the 15% of the market that we achieved in the past quarters. But don't worry, the market is buoyant in power grid, U.S. and Europe. There is no price pressure at all. And... And also, should the cost inflation soften coming quarter, you will see the positive benefit of this unlike related to the cost-price adjustment formula. Moving to IMC, here we had a significant performance in terms of VDAT, 196 million in the quarter, which is 20-plus million over last year. If you add the Forex thing, but it is 17, this is a 40 million increase quarter over quarter. North America drives the growth, certainly with the non-residential business, also and mainly, I would say, with the data center expansion. We have been reported as the number one leader, number one player in electrification data center in quarter four last year and quarter one in 2026. And the EBITDA margin, as you see, at 13%, is well ahead of what we had in quarter 1, 2025. Specialties, we see a little rebound in EBITDA and in EBITDA margins. We finally disposed the two factories that we had in Mexico in quarter 1, 2026. There are two more factories to be rid of in the coming quarters. We still suffer this softening of the automotive business for the remaining market. And the data in the U.S. is particularly down due to the, I would say, continued crisis in the residential market. And some oil and gas often is what caused this 10 million reduction over the year. We are considering that 4 million out of 10 came from the forex. Digital solution is our new driver of growth. First of all, we hit a 20.6% of the margin in the quarter. And now we see head-to-head competition between the margin of transmission and the margin of digital solution. And let me remind you that before the channel acquisition, the best margin seen in this space was 14.5%. So we are now running at a different level of profitability. The quarter itself doesn't show yet the opportunity and the upside associated to hyperscalers. It is $88 million versus $42 million of 2025. Forex hit the result by seven. While you see it was in $25 or $45 million, this is not the case for $26. While you see this number growing significantly in the coming quarters on the back of this pricing power that has increased more volume opportunity and the long-term agreements. I'd like to conclude this section of the business review. and the overall company deal with two outstanding breakthroughs in terms of innovation. Yes, you see on the left the social and climate and innovation KPIs. Intensive innovation, what we've done in this world is amazing. We deliver the first cable able to run 20% more power than the standard 525 TV solution. These will give customers unique opportunities. to invest in a connection whose cost is similar to the original 525 technology, but it can allow them to transmit more power. So the cost per megawatt transmitted is enhanced by 20%. Big contribution to make the energy transition financially more sustainable. And also we created, unique in the world, one cable, aluminum cables, aluminum metal cables, whose carbon content is negative. So, vis-a-vis the standard regular cable, the same carbon that we do, we generate with this production always outweighs the carbon included in the production itself. So, we have a negative footprint in the sense that we create negative carbon emission with these cables. Solution that will be certainly well appreciated by those among our customers are more keen in having grain solutions. And those are higher scales by default. Let me now hand over to Francesco for more details in our financial results.

Thank you, Massimo, and good morning to everybody. Let me start from the top line. As Massimo said, very good growth, 5% organic growth with revenues growing up to 5.2 billion, and a very remarkable growth, particularly in power grid, in INC, and in digital functions. These 5%, by the way, have been reached despite, as Massimo commented, a flattish organic growth in the transmission, which is only temporary, is only due to phasing of the installation activities, and in transmission we see a very strong ramp-up both of the top line and even more, I have to say, in the EVDA in the cabins. Adjusted EBDA saw a good expansion of the margins. You see a standard metal up by 110 basis points, from 13.1 to 14.2%. Here, the important drivers are certainly in transmission and certainly in digital solution, including the accretion coming from the inclusion and the consolidation. As Massimo commented, some temporary adverse effect on margins of power grid due to the lagged pass-through of the cost material increase and the Midwest premium increase. We are very confident and we expect to recover starting from the second quarter. So you see the bridge from Q1-25 to Q1-26. As I said, important to remark the good growth, the very good growth of transmission, but this growth is definitely expected to accelerate a lot in the coming quarter. So this plus 23 million will be much more sizable starting from Q2, Q3, Q4, in line with the indications that Massimo gave earlier. for the full year. Power grid is basically flat as a result of strong growth and the temporary margin adverse effect that we have commented. A very good progression of INC in particular and an outstanding result of the digital solutions as a combination of the inclusion of channel but also the very strong organic growth in the business. unfortunately, a quite adverse forex effect for 36 million, say close to 40 million. But even in this case, this forex effect is expected to decrease, to attenuate in the coming quarters, because you remember that last year the dollar was very strong in the first quarter, then started to weaken progressively throughout the quarter, so we will have a much lower effect than these 36 million in the coming quarters. I have to say that it was also an outstanding Q1 in terms of net profit up to almost 250, also in this case definitely above our expectations, and this is an excellent start to achieve our targets also in terms of earning pressure for the full year. We can move to some other topics. pretty outstanding achievement that we had in the first quarter. I'd like to comment once again definitely above our expectation, which is a free cash flow last 12 months very close to $1.2 billion and even above the already outstanding free cash flow that we had achieved in full year 2025, which was $1,170 billion. You see that also the leverage of our net debt is massive. We go from March 25, which was 4.9 billion, down to 3.8 billion, despite having executed acquisition, you see the first bar, for 1.2 billion, obviously mainly funded by the issuance of the hybrid bond for, say, 1.943 billion. massive deleveraging was achieved through the last 12 months free cash flow, but as you see also from the disposal in particular of our YOC stake. We target a net debt by year-end, let me say, between 2.6, 2.7 billion, and that's a very strong message that I want to give because it means that year-end our leverage will be below one, in principle. This is definitely faster than we thought, for instance, when at the Capital Market Day last March in New York. Excellent. Back to us. Thank you, Francesco.