Saipem Spa

Good morning. This is the Coral's Call Conference Operator. Welcome and thank you for joining the SIPM First Quarter 2026 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 thank you for joining the presentation of Saipem first quarter 2026 results. I'm here in Milan today with our CFO, Paolo Carcagnini, and with the other members of Saipem top management team. The agenda for this session is the following. I will start with an overview of the key operational and financial highlights of the quarter. Paolo will then deep dive in the financial performance, and I will conclude the presentation with few closing remarks. We will then open the floor to your questions. Let me begin with the key highlights of the first quarter. Saipem reported revenue of 3.5 billion euro, in line with the same period of last year. Despite the conflict in the Gulf, we made strong progress on all our projects in the region, recording 1.1 billion euro revenue in Q1 in the Middle East. EBITDA in the first quarter stood at 434 million euro, a year-on-year growth of 24%. EBITDA margin stood at 12.3%, representing an increase of 2.3 percentage points year-on-year and an increase of 0.9 percentage points quarter on quarter. The strong performance at EBITDA level is the result of the strong level of utilization of our construction fleet, as well as the improved project mix. Thanks to the generation of almost 200 million euro of cash flow, our balance sheet has further improved in Q1. we end the quarter with a net cash position of €1.2 billion on a pre-lease basis. Order intake for the quarter amounted to €1.7 billion, corresponding to a book-to-bill of 0.5 times. As previously mentioned, we expect our order intake to accelerate in the coming quarters. as already demonstrated by the awards announced in the last few days. The performance recorded so far this year, notwithstanding the conflict in the Middle East, has been one of the key elements which led us to confirm our 2026 guidance. We will come back to this in more details later in the presentation. In the context of the typical seasonality of our business, our delivery in Q1 has continued to be very consistent and resilient. As already mentioned, the conflict in the Middle East has not had a material negative impact on our operational and financial performance in Q1. While revenue growth is moderating, the growth trajectory remains very evident at EBITDA and cash flow level, also reflecting the improved quality of our portfolio. Also, EBITDA margin has more than doubled in the quarter since the beginning of 2022. Notwithstanding the very strong cash flow generation in 2025, we continue to generate a substantial amount of cash in Q1, with operating cash flow reaching almost 400 million euro. Let us now turn to the recent EPC awards. A big portion of our order intake to date has come from the Middle East, confirming the resilience of the commercial activity in the region. Since the start of the year, we have been awarded by Aramco three CRPOs for a total of $900 million. These projects are aimed at maintaining the production level of Safania, one of the largest offshore oil fields globally. The offshore operation for this project in Saudi Arabia will be carried out by construction vessels that are currently dedicated to the Middle East. The fabrication activities will be executed at Saipem Sodhi Fabrication Yard in Daman, minimizing the risk of potential disruption in the traffic through the Strait of Ormos. In addition to the work from Aranko, we have recently announced a further project for ENI in the biorefinery space, this time in Sicily. This contract strengthened the collaboration launched in 2023 between IENAI and CITEM for the development of biorefinery in Italy. The new Priolo biorefinery will have a capacity of 500,000 tons per year, offering high operational flexibility to produce SAF biogas fuel and HVO diesel fuel. All in all, since 2023, we have totaled more than €1 billion of EPC awards in biorefineries. Lastly, Exxon has assigned us Lone Tail, the eighth project in a row in Guyana, confirming the trust in our deepwater EPCI capabilities. We expect our order intake to accelerate further in Q2, in particular with additional activity in the operating and maintenance space. Let me now turn to the recent commercial activity in drilling offshore. In the first quarter, we managed to sign contracts aimed at filling several gaps in our schedule for 2026. and to start building visibility for 2027 and beyond. For the SIPEN 12,000, we secured three contracts, ensuring high level of utilization for the next two years. In particular, we signed an extension of the contract with Azul in Angola, a new contract with Rhino in Namibia, and a new contract in joint venture with ENH in Mozambique. For the Santorini, we have signed a contract with ENI in ivory cost. In the first quarter, we have also finalized the extension of the contract with Aker BP for the Scarabeo 8, which will now operate in Norway till March 2029. Lastly, we extended the operation of the Peronegro 4 that will continue to work for Petrobras in Egypt till the end of 2027. Let me now take a closer look at Saipan's operations in the Middle East. At the end of Q1, Saipan's backlog in the region amounts to €11.5 billion, mainly in the offshore segment. As you know, we have a dedicated fleet of construction vessels and drilling J-caps in the Gulf. It is important to note that this fleet is largely dedicated to the area, meaning that there is no need for additional vessels to enter in the Gulf, nor for these units to transit through the Strait of Hormuz to execute projects outside the area. Project execution in Q1 has been steady, with only minimal and temporary disruption being recorded. Considering the progress made in Q1, and the expectation that the traffic on the Strait of Hormuz will normalize in the coming weeks, we decided to confirm the 2026 guidance. It should be noted, a further prolonged closure of the Strait of Hormuz could impact the delivery of certain components which are critical to SIPEN projects globally, in addition to disrupting worldwide logistics and potentially driving up inflation. However, Current crisis is also likely to further reinforce the already positive outlook for energy investment globally, on top of requiring additional investment needed to repair certain energy infrastructure in the Middle East. Let me now give you an update on Courcelles-sur-Mer. We are making steady progress on the project. To date, we have successfully drilled 24 sockets and installed 15 monopiles. This means that since our last update late in February, we drilled further 6 additional sockets and installed 5 additional monopiles. We confirm the completion is expected in Q1 2027. Let me now give you an update on our commercial activity. As you can see from the numbers, our pipeline remains robust. In terms of mix, we continue to see a solid set of opportunities in offshore ENC, across both conventional and deep water. At the same time, we are seeing encouraging prospects in FTSOs, upstream, as well as in fertilizer, biorefinery, and operating and maintenance segments. Geographically, our pipeline is largely concentrated in Middle East and Africa, while we see attractive potential for growth in the Far East. And now let me hand over to Paolo to cover the financial results in more details.

Thank you, Sandro. Good morning, everyone. I'll begin with slide 12, which provides an overview of Saipem's main results for the first quarter of 2026. Revenue was largely unchanged from the same period of last year at 3.5 billion euros, while EBITDA grew by 24% to reach 434 million euros. The EBITDA margin showed notable improvements year-on-year, rising to 12.3% compared to 10% in last year's first quarter and 11.4% in Q4. The strong performance was mainly due to the expanding margins in the offshore ENC segment, which more than compensated for reduced profitability in the drilling business line. Net results and operating cash flows stood at 78 million euros and 392 million euros respectively, broadly in line with last year. The growth of the chartered fleets year-on-year across all business lines increased lease-related DNA, offsetting EBITDA gains and keeping EBIT flat. This effect is more pronounced in Q1 due to the typically lower volumes in the first quarter of the year. The increase in the lease component of the DNA was both driven by the growth of the fleet of construction and support vessels, but also due to the DVD lease accounting treatment change in 2025. Let me now turn to the performance of our three business lines, starting from asset-based services on page 13. Revenue in the first quarter of 2026 exceeded €2 billion, representing a 2% increase year-on-year. Such performance was mainly driven by strong progress of our projects in the Mediterranean Sea. In terms of specific projects, the most relevant ones that materially supported the top line were Com3 in Qatar, Buri in Libya, and Neptune in Romania, which more than offset the impact of the completion of Sakaria II in Turkey. EBITDA stood at €333 million in the first quarter, an increase of 33% year-on-year, with a margin expansion of 3.7 percentage points versus the same period of 2025, and 80 basis points quarter-on-quarter. The margin expansion was mainly driven by a better utilization rate of the owned construction fleet. The growth in EBITDA more than compensated the increase in the least portion of the DNA, leading to an expansion of the EBIT margin of 50 basis points year-on-year from 5.8% to 6.3%. Now, assuming no major disruptions in the Middle East or Strait of Hormuz, we expect low single-digit revenue growth and double-digit EBITDA and EBIT growth for 2026, along with improved margins year on year. Let me now move to drilling offshore on page 14. The year-near decline in both revenue and EBITDA mainly reflects. First, the reduction in the size of the fleet, following the exit of the Pioneer and the Peronegro 12 jackups in 2025. Second, a lower activity by the Peronegro 7 and Peronegro 8, the latter undergoing ordinary maintenance in Q1 2026. Third, marginally lower day rate for the second 10,000, Santorini and Scarabeo 9. These were partially offset by an higher day rate for the Scarabeo 8, higher utilization of the Serpent 12,000 and the Peronegro 10. All in all, we continue to believe that 2026 will be a transition year for our drilling offshore business, and we anticipate double-digit decline in both revenue and EBITDA compared to 2025, with EBITDA margin declining year-on-year. This is mainly due to the concentration of maintenance activities, some white spaces related to floaters, and lower day rates on selected rigs. Let's now conclude our review with energy carriers on page 15. Revenue remained broadly stable in Q1. This was the result of an increased contribution by projects such as Mozambique LNG and biorefineries in Italy. fully offset by lower contribution by projects such as Berry, Marjan and Jafura in Saudi Arabia, as well as Bonny in Nigeria. EBITDA margin almost doubled compared to the same period of last year and grew by 20 basis points quarter on quarter, reflecting the improved project mix. Assuming no major disruptions in the Middle East or Strait of Hormuz, we expect revenue to decline slightly, while EBITDA margin to improve in 2026 compared to 2025. The restart of the Mozambique LNG project will contribute positively to the results, while project completion in various regions will partly offset the gains. Let's now look at the figures below EBITDA as shown on page 16. DNA increased by more than 40% in 2026 compared to 2025. As discussed several times already, this reflects the growth of the fleet on a charted basis. In particular, DNA related to the leases almost doubled year on year, from around €90 million to around €870 million. The overall level of DNA recorded in Q1 2026 is a good proxy for the following quarters, for a total of approximately €1.1 billion expected in 2026. Financial expenses stood at €41 million in Q1, a decline of €14 million year-on-year, reflecting mainly a decline in the net financing cost X IFRS 16, partially compensated from the higher interest due to leases and exchange differences, as well as lower hedging costs due to a reduction of the interest rate differential between the euro and the US dollar, and lower volume of traded derivatives. Financial expenses for the full year 2026 are expected to be slightly lower than 2025. Income taxes rose year on year by 15%, implying an effective tax rate of 37% compared to 34% a year ago. Tax rate is expected to decrease in 2026 from 40% reported in 2025 towards the 33% to 38% area. Let's now focus on cash flow and net financial position on page 17. In Q1 2026, the pre-IFRS 16 net cash position improved by €218 million to more than €1.2 billion. This is primarily due to the cash generation totaling €199 million. Cash flow was especially strong in Q1. because it was not aided by advance payments, which actually fell by €80 million since the end of 2025, following a better-than-expected and above-budget performance in 2025. Least liabilities declined by €31 million in the first quarter, and they are expected to continue to decline in the next few quarters, as we release some chartered support vessels back to the owners, with expected completion of some specific projects. Lease repayments in Q1 2026 amounted to €138 million, broadly stable compared to Q4 2025. We expect lease liabilities to decline to approximately €900 million at the end of 2026, from approximately €1.3 billion at the end of 2025, while to expect lease repayments to be around €650-700 million for the full year 2026. To wrap up, let's quickly look at the staff and debt and liquidity position at the end of March. Our liquidity position is very solid and stands at 3.6 billion euro. This is made of 1.4 billion euro of available cash, 1.6 billion euro of cash in JVs and 600 million euro related to the undrawn RCF. As anticipated 12 months ago, we are looking to reduce gross debt by repaying all maturities that fall in 2026, for a total of 271 million euro. We are in fact repaying, using the available cash, 30 million euro related to ECA facilities today, and we are planning to repay 241 million euro worth of EMTN bonds at maturity in July. We also have a clear target to achieve an investment-grade credit rating in the medium term, a target which is well supported by the conversation we are having with the rating agencies. I'll now hand it back to Sandro for his closing remarks.