Saipem Spa

Good morning, this is the Coruscall conference operator. Welcome and thank you for joining the CYPEM first half 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.

Thank you and good morning. Thank you for joining us for the presentation of Saipem's results for the first half of 2025. I'm here in Milan today with our CFO Paolo Calcagnini and with the rest of the members of the Saipem senior management team. As you know, today is a special day for all of us, after the merger agreement announced last night. But in today's call, we are focusing on Saipem as a standalone company. I will start the presentation covering the key highlights of Q2, Paolo will then cover the financial results in more detail, and then I will wrap up with my closing remarks before opening the Q&A session. Let's start with the key highlights. I am pleased to report, in the second quarter, Saipem recorded a very strong performance in terms of revenue, EBITDA and cash flow generation. on top of having made the largest dividend payment in its history. Revenue stood at 3.7 billion euro, growing by 10% year-on-year and 5% sequentially. EBITDA stood at 413 million euro, growing by 39% year-on-year and 18% sequentially. EBITDA margin stood at 11.2%, a significant improvement compared to the previous quarter margin of 10%. In Q2, operating cash flow reached the record level of €447 million. The order intake in the second quarter stood at €2.2 billion, in line with the order intake of Q1. We expect our order intake to accelerate in the second half of the year, in line with the market dynamics. Our backlog remains close to the record high level, providing us with an excellent visibility for both 2025 and 2026. SIPEM continues to deliver steady growth and improved cash flow conversions. Revenue more than doubled since the beginning of 2022. EBITDA has increased in the same period by a factor of 4. EBITDA margin has also doubled and currently stands above 11%. Cash flow generation has grown steadily over the last three years, reflecting the progress made in executing the legacy backlog and the proactive management of the working capital. In particular, in the first six months of the year, our company has already generated an amount of cash flow equal to 80% of what we delivered in the full year 2024. Let's now cover in more detail the latest awards. The order intake of the quarter includes two energy transition projects from ENI and a substantial feed award from Sonatrac in Algeria. The key features of these awards are First, we are confirming our strong positioning in the CO2 management value chain in the UK following the East Coast Cluster Award in 2024. Second, we are also accelerating the conversion and upgrade of existing refining facilities for ENI. Third, we continue to de-risk our own shore awards by ensuring a substantial portion of the scope of work is under a reimbursable framework. Fourth, the feed in Algeria for an integrated fertilizer plant has also allowed us to make an important step in meeting our service order intake target for the year. As a reminder, engineering service, operating and maintenance and project management consultancies are key drivers for repositioning of our onshore business. We will cover this aspect in more detail later in the presentation. Let's now deep dive on the recent CO2 management awards. We are excited about the current development in CCUS, and we believe that this market will grow into a sizable opportunity for Saipem in the years to come. The order intake of last year was about projects for offshore CO2 transportation. In the first half of 2025, we started to collect orders for CO2 capture and management also in the onshore sector. Currently, Saipem is working on four CCUS projects for a total value of 2 billion euro. The clients for most of these projects are oil and gas companies and we have a consolidated relationship with most of them. Also, these projects are well diversified in terms of geographical footprint and also attractive in terms of size. Let's now focus on the recent developments in our service businesses. One of the key pillars of our strategic plan is the de-risking of our onshore APC framework. also by growing in the service market. I'm glad to report that we are making progress, and in particular, in the engineering services, we have acquired more than 300 million euro business since the beginning of the year, including the FEED study in Algeria, but also other studies in Italy. In the PMC space, we have now started our first project in West Africa, and we are awaiting feedback on several bids we have submitted. The pipeline in PMC looks promising. On operating and maintenance, we are working on a substantial list of prospective projects across the globe. We will give you regular updates on the evolution of our services offer going forward. Let's now have a look at our commercial effort. As you know, we are coming out of two very strong years in terms of order intake, totaling almost 40 billion euros of awards. Nevertheless, our commercial pipeline for the next 18 months remains robust at 53 billion euros. Also, half of our pipeline related to gas upstream projects, which are less sensitive to swings on oil price. We are also awaiting feedback on several feeds submitted, totaling 7 billion euro, and we expect to submit additional bids for 16 billion euro during the remainder of the year. As such, we remain confident about our order intake target for 2025. Let me now give you an operational update on two very important projects. On Courcelles, we confirmed the plan already presented in the Q1 results. We are aiming to restart the drilling activity next month and we expect to complete it by the end of 2026. Moving to Norway, I am glad to report that the Castorone vessel completed the laying of about 79 km of pipe-in-pipe pipeline for Equinor, connecting the IRPA subsea production template with the existing platform. This project is the deepest steel pipe ever installed in Norway and it is amongst the deepest piping pipe globally laid in S-lay mode, further consolidating Saipen leadership in pipe laying. The Castorone will now move to Guyana to do work for Exxon in the Uaro and Whiptail fields. I will now hand over to Paolo so he can give you more details on the financial results of the first half.

Thank you Sandro. Good morning everyone. We will start from slide 12 which represents a summary of our financial results for the first half of 2025. Revenue increased by 12% year-on-year to €7.2 billion, and our EBITDA grew by 35% to €764 million. The growth has been primarily supported by our offshore ENC activities. EBITDA margin keeps on improving, having surpassed the 10% threshold, up from 8.8% in H1 last year. This is due to a more favorable business mix and to the reduced incidence of the legacy projects. Our net result was €140 million, 19% higher than H1 last year. Operating cash flow stood at €842 million, mainly driven by the growth in EBITDA year-on-year and the contribution of working capital movements. Let's now review the different business segments, starting with asset-based services on page 13. Revenue stood at €4.1 billion for H1 2025, marking an 18% increase from last year, mainly driven by the growth of the SERF and conventional activities. The revenue mix remained relatively stable between surf and conventional, with a slight increase in the weight on conventional projects year on year. The growth trajectory was mainly driven by the increased backlog after the strong order intake of the last 18 months. EBITDA stood at 539 million euro, up by 38%, and EBITDA margin stood at 13.2%. an increase of 190 basis points year on year. The increase in profitability is mainly driven by the good progress made on projects in the Emirates and Qatar and by the conclusion of the Saqqariya project in Turkey. For the second half of 2025, we expect a double-digit growth in revenue compared to the first half of 2025 and a further improvement in EBITDA margin, mainly driven by the expected growth in volumes in both conventional and self-activities. Let's now look at the drilling offshore on page 14. Revenue stood at 461 million euro, broadly stable compared to the same period last year. EBITDA grew by 11% year-on-year to 185 million euro. EBITDA margins stood at 40.1%, a 290 basis points improvement year-on-year. In more detail, during the first half of 2025, 10 of the 14 units were fully booked and busy with the respective drilling campaigns. The Seppem 12000 underwent maintenance in Q1, but has been operational in Q2. The Perro Negro 10, following the Ramco suspension, underwent preparation works and has already moved to Mexico to start working in Q3. The Perro Negro 7 underwent maintenance in Q2, coinciding with the beginning of the Aramco suspension. The Perro Negro 12 contract was terminated by Aramco in Q2, with the jack-up expected to be delivered back to its owner in the coming quarters. All in all, we are reducing our fleet by three units, namely the Perro Negro 9, 12 and Pioneer. which have been returned or will be returned to their owners. As a reminder, these units are not owned by Saipem, but leased. And as such, our capital light strategy has helped us navigating well through the Aramco suspensions. For the second half of 2025, we expect a low-teens decline in revenue and high single-digit decline in EBITDA, compared to the first half of 2025. reflecting the reduction of the jack-up fleet, some white spaces, as well as the impact of planned maintenance activity. Let's now look at the energy carriers on page 15. Revenue grew by 6% year-on-year, reaching €2.7 billion. As a reminder, backlog related to energy carriers declined by 11% in the last 18 months. And as such, this means that Saipem is accelerating on the execution of the projects, in particular of the legacy backlog. Epita margin improved year-on-year, reaching 1.5% in the first half of 2025. Our primary goal in energy carriers is to complete the execution of the remaining legacy backlog while being very selective about the intake for new projects. For the second half of 2025, we expect a pick-up in revenue compared to H1 and a further improvement in profitability. The complete Group Income Statement is shown on page 16. We can now discuss some of the key items below EBITDA. DNA stood at €459 million and increased by €149 million 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 €94 million in H1 2025. increasing by €21 million year-on-year, mainly reflecting the interest on lease liabilities and an increase in hedging costs due to the growing rates differential between the US dollars and the euro. Income taxes remained broadly stable year-on-year at €72 million, whilst the implied tax rate declined by 4.7 percentage points to 33.8%. On page 17, you can see the evolution of our net financial position. The cash flow generated in the first half of 2025 improved our net financial position by €171 million on a pre-IFRS basis, from a net cash position of €683 million to €854 million. This is a remarkable result considering that in May we paid dividends to our shareholders for €331 million. Gross capex stood at €191 million and were partly offset by disposals for €115 million, mainly related to the proceeds from the sale of the 10% stake in KCA, which was completed in Q1. Repayment of lease liabilities increased to €167 million in H1 2025 compared to €85 million in H1 2024, reflecting the growth in the fleet on a chartered basis. In line with our plan, lease liabilities increased in H1 by €399 million. For the second half of this year, We expect a marginally positive cash flow generation, but significantly lower than what was recorded in the first part of the year. This is mainly due to the expected reversal of the positive working capital dynamic seen in H1. On page 18, 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 almost €1.3 billion of available cash, which is sufficient to cover almost all our maturities to 2029. As you know, with the 2025-2028 strategic plan, Saipem has set itself the target to achieve an investment-grade credit rating, and this is a key priority for us. we will continue to reduce our debt in the coming quarters. Let me now hand it back to Sandro for his closing remarks.