Saipem Spa

Good morning, this is the Coruscall conference operator. Welcome and thank you for joining the SIPEM first quarter 2025 results conference call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Alessandro Puliti, CEO of Saipem. Please go ahead, sir.

Good morning and welcome to the presentation of Saipem results for the first quarter of 2025. Paolo Calcagnini, our CFO, and the rest of the top management team are here with me today in Milan. I will start by giving you the key highlights. Paolo will then cover the financial results in more details, and we will then wrap up the presentation with few closing remarks. After our prepared remarks, there will be time for a Q&A session. Let's start with the key highlights. I'm pleased to report that in Q1 2025, SITEM recorded the strongest performance of the last decade in terms of first quarter revenue, EBITDA and cash flow. Revenue stood at 3.5 billion euro, growing by 15% year on year. stood at 351 million euro growing by 31% year on year. EBITDA margin reached a level of 10% an improvement of 40 basis points compared to the previous quarter. In Q1 we further reduced our net debt position by 285 million euro. At the end of March we held 1.6 billion euro of available cash in our balance sheet the order intake in the first three months stood at 2.1 billion euro in line with the first quarters of the last three years our backlog remains close to record high levels providing excellent visibility for both 2025 and 2026 which is particularly important for us considering the current volatility in the markets. On slide five, you can appreciate the continued growth path of the last three years. Revenue almost doubled from Q1 2022 to Q1 2025 and EBITDA has increased by a factor of more than three times. In addition, our EBITDA margins has increased by 440 basis points in the last three years. The recovery path is even more visible in our operating cash flow, which has steadily increased quarter after quarter. The improvement in cash flow conversion is mainly the result of two factors. First, Steady progress in the execution of our legacy portfolio projects. Second, better management of working capital also driven by improved contractual terms and conditions. Let's now cover in more details the recent awards. On the offshore business, the first award is in the Middle East for Qatar Energy and is another example of the growing importance of maintenance activity on existing offshore infrastructures, which is an integral part of SIPEM offering and this is also a significant capex driver for our clients. The second contract is a limited notice to proceed from Exxon in Guyana and involves the APCI of a surf package related to the Amered oil field development project. The field is in the Stabrook block at a water depth of around 1000 meters. This award is a further confirmation of the strong partnership between Saipem and Exxon in Guyana, which started back in 2017. On the onshore business, we are accelerating the conversion and upgrade of existing refinery facilities for ENI. In Venice, we will expand the existing biorefinery to increase production capacity by 50%. In Livorno, we will convert the existing facility into a biorefinery and make it suitable to produce both HVO and sustainable aviation fuel. In addition, we recently signed the EPC contract related to the CO2 management projects with Stockholm Exergy. something we have been working on for almost two years. CCUS is a very interesting and promising market where we are establishing a strong presence both onshore and offshore. I would like to highlight that the recent order intake in the onshore ENC is perfectly in line with the strategic repositioning we have communicated in the most recent plan. First, the new awards include significant de-risking mechanisms compared to the traditional fixed price contract framework. Second, the new awards also target niche segments in the energy transition, such as CCUS and biorefineries. Lastly, the new awards confirm our value over volume approach, being all mid-scale projects. So, in line with our strategy, the onshore E&C business is becoming more selective and more focused, with a new backlog that embeds today a far lower quantum of risk compared to the past. Let me give you now a brief update on Courcelles. As you know, From the full year 2024 results update, four sockets have been successfully drilled. Notably, the last one was completed in just nine days, bringing us very close to our target of one socket per week. Also, all the monopiles related to the four sockets have successfully installed, and the vibro-hammering process proved to be very smooth. In the last few weeks, we have been busy moving the drilling machine from the volovan jack-up to the bold turn jack-up. We are aiming to restart the drilling activity in late summer 2025 with the plan to complete the drilling scope of work in 2026. I will now hand over to Paolo to provide more details on the financial results.

Thank you, Sandro. Good morning, everyone. We'll start with slide 10, which presents a summary of our financial results for the first quarter of 2025. Group revenue increased by 15% year-on-year, and our EBITDA grew by 31%, primarily driven by our offshore E&C business. EBITDA margin keeps on improving, having reached the 10% threshold, up from 8.8% in Q1 last year and from 9.6% in Q4. This is due to a more favourable business mix and to the reduced incidence of the legacy projects. Our net result was 77 million euro, 35% higher than Q1 last year. Operating cash flow stood at 395 million euro, mainly driven by the growth in EBITDA year-on-year and the contribution of working capital improvements, only partially offset by the utilization of provisions related to the portfolio of legacy projects. Let's now review the different business segments, starting with asset-based services on page 11. Revenue reached almost €2 billion for Q1 2025, marking a 20% increase from last year, The revenue mix remained relatively stable between surf and conventional. EBITDA stood at €251 million, up by 39%, with EBITDA margin of 12.8%, an increase of 180 basis points year-on-year and 20 basis points quarter-on-quarter. The growth trajectory was mainly driven by our increased backlog, in particular associated with strong order intake of the last 12 months on oil and gas projects. Let's now look at drilling offshore on page 12. Revenue stood at 211 million euro, broadly stable compared to the same period last year. EBITDA grew by 2% year-on-year to 82 million euro. The stable trend is the result of the broadly unchanged fleet size year-on-year, with the Perro Negro 13 entering the fleet in Q1 last year, the Perro Negro 9 exiting the fleet in Q1 this year, and the Perro Negro 10 not contributing in Q1 2025 as being under preparation for the new contract. In addition, the ordinary maintenance activity didn't have any material impact on the year-on-year trend as the Scarabeo 9 was undergoing maintenance in Q1 last year, whilst the Saipem 12,000 underwent maintenance in Q1 this year. Let's now look at the energy carriers on page 13. Revenue increased by 11% year-on-year, reaching €1.3 billion. As a reminder, the backlog related to the energy carriers declined by 11% in 2024, And as such, this means that we are accelerating on the execution of projects, and in particular of the older ones. EBITDA margin improved year on year, reaching 1.3% in the first quarter of 2025, an increase of 60 basis points compared to the first quarter of 2024, and an increase of 20 basis points from the fourth quarter of 2024. Our primary goal in energy carriers is to complete the remaining legacy backlog while being very selective about the new projects. The complete group income statement is shown on page 14 and we can discuss some of the items below EBITDA. DNA stood at 194 million euro and increased by 49 million euro compared to last year, mainly reflecting the growth of the fleet on a chartered basis and the leases associated with them. Financial expenses stood at 55 million euro in Q1 2025, increasing by 15 million euro year-on-year, mainly reflecting an increase in the hedging cost due to the growing rates differential between the US dollars and the euro, as well as higher volumes of traded derivatives. Income taxes increased by 6 million euro compared to last year to 40 million euro, whilst the implied tax rate declined by 3% points to 34%. On page 15, you can see the evolution of our net financial position. The cash flow generated in Q1 improved our financial position by 285 million euro on a pre-IFRS basis, from a net cash position of 683 to 968 million euro. Operating cash flow was supported by positive contribution of working capital, which has more than offset the cash absorption deriving from the portfolio of legacy projects. Gross capex stood at 109 million euro, and were almost entirely offset by the disposal for €101 million, mainly related to the proceeds from the sale of the 10% stake in KCA. Repayment of lease liabilities increased to €70 million in Q1 2025 compared to €47 million in Q1 2024, reflecting the growth of the fleet on a chartered basis. In line with our plan, leased liabilities increase in Q1 by €192 million, considering the growth of the fleet on a chartered basis. A key addition to our chartered fleet in Q1 has been the bold turn jack-up, which will be used to complete the drilling activity on the Courcelles project. As a reminder, the delivery of the Chenda vessel will be a Q2 event, and as such is not reflected in the Q1 movements. On page 16, you can find a detailed breakdown of our gross debt and liquidity. Our liquidity position is very robust, at more than €3 billion. Also, we currently hold €1.6 billion of available cash, which is sufficient to cover almost all of our maturities to 2030. Lowering both gross and net debt remains a key priority for CEPEN, which has also been appreciated by the rating agencies. I'm pleased to report that on the back of our 2024 results and of the 2025-2028 strategic plan, Moody's has upgraded our rating to BA1, maintaining a positive outlook. We are now one notch below investment grade for both S&P and Moody's. As you know, with the 2025-2028 strategic plan, SIPM has set itself the target to achieve an investment-grade credit rating in the medium term, and this is a key priority for us. Let me now hand back to Sandro for his closing remarks.