Sesa Spa

This is the course call conference operator. Welcome and thank you for joining the CESA group full year 2026 consolidated nine months results conference call. As a reminder, all participants are on 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 Jacopo Laschetti, stakeholder relations and head of sustainability. Please go ahead.

Good morning, and thank you for joining the CESEC Group presentation. Representing the group today are Alessandro Fabroni, Group CEO, Caterina Gori, Head of Investor Relations and Corporate Finance and M&A, and myself, stakeholder relations and head of sustainability. Earlier today, the Board of Directors approved the consolidated financial results for the nine months of fiscal year 26, ended January 31st, 2026. The corporate presentation is available on the CESA website and will serve as a reference throughout today's conference call. Alessandro will begin by providing an overview of our key business developments and achievements.

Good morning everybody and thank you for joining our group presentation. In a challenging market that presents great growth opportunities driven by enterprise digitalization, widespread adoption of cloud and data protection, and integration of AI and automation, CESA is strengthening its market share by leveraging the role of leading digital integrator in Italy across the key areas driving digital transformation as cloud, data management, cybersecurity, digital platforms and AI. The Italian digital market is expected to grow by approximately 4% in 2026 and 2027 period, sustained both by demand for technologies and solutions enabling AI, and the increasing need to integrate and manage environments that combine AI with data governance and data protection, fully compliant with national security and regulatory requirements. In that scenario, CESA accelerates its growth in line with the industrial plan guidance by combining technology, platforms and vertical applications to drive value creation and innovation for enterprises and organizations with a growth path of two times the Italian digital market trend. In the nine months ended January 31, CESA reported consolidated revenue equal to $2.7 billion up 11.2% compared to reported figures, and 7.5% compared to pro forma figures, with an MBDA equal to 191 million, up 11.5% here on here compared to reported, and 8.2% compared to pro forma 25, with an MBDA margin increasing to 7.1%, and the Group EIT adjusted equal to 82.1 million, up 12% year-on-year compared to reported figures, and 8.8% against pro forma 25 figures. The third quarter 26 alone shows a strong acceleration in growth with consolidated revenue achieving EUR 1.1 billion, up 10.5% year-on-year, an EBITDA rising to EUR 77 million, up around 12% year-on-year, and the group EIT adjusted achieving EUR 37 million, up 10.4%, driven by above higher operating profitability and a 20% greater reduction in quarterly net financial expenses. Consolidating results show positive contribution from all group sectors in comparison with the 9 months 25 pro forma figures. ICT VAS due to Euro 1.7 billion, up 7.2% year-on-year. Fully organic, with strong acceleration in third quarter 26 alone, up 14.4% year-on-year. Thanks to the increasing demand for technology and digital integration, driven by growing data management and protection, linked to AI and automation adoption. green vaes achieved euro 307 million up 21 year-on-year expanding its double digital organic draw experience in first half 26 and driven by rising energy demand impacted by digitalization ai and automation adoption System integration delivered €663 million up around 2.5% year-on-year, showing a resilient performance despite slower demand in some made-in-Italy districts and the ongoing organizational re-engineering process. Finally, business services reached €120 million up 9% year-on-year, fully organic, supported by the development of digital platforms and vertical applications for the financial services industry, with a progressive focus on security compliance capital markets and finance segments. In the third quarter alone, revenues accelerated by 12.6% year-on-year, thanks to the start of some multi-year contracts with major Italian banks. Consolidated BDA increased by 11.5%, 8.2% compared to pro forma figures. achieving €191 million, with an EBITDA margin for 7.1% compared to 7.0 year-on-year, driven by the strong growth achieved by BAS, both green and ICT, and business services sectors, and the progressive improvement of software and system integration sector quarter by quarter. Segment's contributions to EBITDA were as follows. ICT VAS reported 76 million up 13% year-on-year, with an EVDA margin of 4.5% up compared to 4.3% year-on-year. Green VAS delivered Euro 21 million EVDA up 22% year-on-year, with a stable EVDA margin at 6.8%. System integration and software recorded EUR 71.6 million, up slightly by 0.2%, with an EBITDA margin of 10.8% compared to 11.1% year-on-year, with a great return to growth in the third quarter alone, up 3.5%, with strong quarterly BDA margin equal to 11.6% compared to 11.3% in Q3 2025 alone and 9.9% in Q2 2026 alone. Finally, Business Services reported Euro 19.6 million BDA up around 9% year-on-year, with a stable EBITDA margin at 16%. In Q3 2026 alone, EBITDA grew by around 12% year-on-year, supported by new multi-year contracts with leading clients, with a quarterly EBITDA margin of 17% compared to around 12% in Q2 2026 alone. Consolidated adjusted EBIT reached €145 million, up around 9% year-on-year, after depreciation and amortization of tangible and intangible assets for €40 million, up 13.5% year-on-year, and provision for €6.2 million. The reported EBIT was equal to €112 million. up 7% year-on-year, after good demortization for around 30 million, up 15% year-on-year. Net financial expenses decreased significantly, down 20% in the third quarter alone, thanks to lower interest rates and group financial efficiency initiatives. The consolidated EAT adjusted amounted to €88.2 million, up 15% year-on-year compared to reported figures and around 10% compared to performed, reflecting the growth in operating profitability and the lower financial expenses, while Group EAT adjusted achieved €82.2 million, up 12% year-on-year compared to reported and around 9% compared to performed. In the nine months of 2026, the group also delivered a strong cash flow generation, sustained by organic profitability growth and a more efficient working capital management. The consolidated reported net financial position was equal to €58 million, a significant improvement for €33.7 million compared to €92 million as of January 2025. This performance reflects a great last 12 months operating cash flow, net of €150 million of investments last 12 months, of which €90 million in the first 9 months of 26, with €90 million related to M&A, of which €55 million in the first 9 months 26, and after €41 million in dividends and buybacks last 12 months. The consolidated net financial position, excluding IFRS liabilities, was active for €147 million of net cash, up around €40 million compared to €108 million of net cash of January 2025. Now, after presenting the so positive set of financial results, I give the floor to Caterina to explain our M&A and shareholder value creation strategy.

Thank you Alessandro. After years of significant M&A activity, our new FY2026-2027 industrial plan represents a strategic shift with a clear focus on simplifying the group and accelerating organic growth. We will capitalize on the capabilities and business model we have developed over the years to drive sustainable growth, supported by target cabex in AI and automation, and skill development to enhance efficiency, scalability, and market penetration. Investments in the last 12 months amounted to approximately €150 million, of which €90 million were allocated to M&A. Specifically, in the first 9 months of FY2026, total investments reached €90 million, with €55 million attributable to M&A, reflecting a more selective and value-driven investment strategy. In the last 12 months, investments level remained elevated, largely reflecting the fourth quarter of FY2025, when the Group completed approximately €60 million of investments in that work alone. On the contrary, no significant M&A activity is expected in the fourth quarter of FY2026, in line with the strategy outlined in the 2026-2027 Industrial Plan. In addition, in the fourth quarter of FY2026, Celsa will complete the sales of its 6.6% stake in digital value holding for a price of approximately €11 million. This disinvestment is fully consistent with the industrial plan, which focuses on strengthening core activities and contemplates the potential disposal of non-strategic asset, in line with the discipline and optimised capital allocation approach, while maintaining flexibility to evaluate selective non-core disposal during FY2026. In the nine months of FY2026, we further strengthened our international presence through four strategic acquisitions, all within the SSI sector. Two M&As consolidated in the first half of FY2026, with total investments of approximately €7 million. The first, Visicon GmbH in Germany, and SAP Consulting Specialists, with €5.3 million of revenues. and Delta Tecnología de Información in Spain, an AI-driven player in digital identity with Euro 2 million in revenues. But companies deliver a BDA margin above 10%. Two additional M&As with total investments of approximately €15M. Albasoft, a €2.2M revenue software company, specializing in treasury and finance management solution. And 4iKey, a Swiss cloud and managed service company with €9M in revenues. Both companies have been consolidated from November 2025, delivering a combined EBDA margin above 10%. The deal structure is designed to ensure the long-term commitment of key people in the target companies, with an entry valuation of around 5x EBDA, adjusted for net financial position consistent with our standard approach. These acquisitions confirm our strategy, a selective approach of high-value M&A in Europe, together with continuous strong investment in digital transformation areas such as AI, automation and digital platforms. As outlined in the 2026-2027 Industrial Plan, we are fully committed to generating strong cash flow and delivering solid returns to our shareholders, as demonstrated by our latest shareholder distribution with a total 40% payout ratio consisting of a dividend of €1 per share, totaling EUR 15.5 million distributed last September. A share buyback programme increased to EUR 25 million for FY2026 compared to EUR 10 million in the previous year, completed last January 2026, with the cancellation of Treasury share representing approximately 2% of CESA share capital. Considering the results achieved in the first nine months of FY2026 and the confirmation of the guidance at the upper end of the range of FY2026, the conditions are in place to renew distribution plan for our shareholders also for FY2027. I now invite Jacopo to present our ESG results for the nine months of FY2026.

Thank you, Caterina, and good afternoon, everyone. I will focus my remarks on how sustainability and people management are supporting the execution and financial performance. Over the nine-month period of Fiscal Year 26, sustainability has been increasingly integrated into the way systems manage growth, execution, and risk, in line with the targets of the 26-27 Industrial Plan. This integration improves revenue visibility, operational efficiency, and long-term value creation. From a business standpoint, Cesar's role as a digital integrator is structurally aligned with long-term market drivers such as visualization, cloud adoption, data management, cybersecurity, automation, and energy efficiency. In this context, sustainability is not a separate dimension, but part of the framework that strengthens the relevance and resilience of our business model. On the environmental side, our approach remains focused on control, accountability and compliance. Internally, we continue to monitor energy consumption, resource efficiency and environmental KPIs in a structured way, aligned with the CSRD requirements. Externally, the digital green sector represents a growth area supported by increasing demand from enterprises facing higher energy needs linked to digital technologies and AI adoption, with over 300 million revenues in the nine-month period. This combination of internal governance and external market opportunity contributes to reducing transition and regulatory risk, while supporting organic growth. With regard to people and organization, the nine-month period of January 31, 2026 confirmed a shift to a more selective and efficience-oriented approach, consistent with the industrial plan of the group. Headcount reached 6,749 with moderate growth, 3.3% compared to fiscal year 2025, focused on priority areas such as AI, data science, cybersecurity, and digital platforms. As in the past, our target is to create a sustainable long-term value for our stakeholders. Investments in skill developments, training and digital tools are aimed at sustaining productivity and delivery capacity as the group scales and manages more complex projects. In this phase, people management is a key element in supporting execution, reducing operational risk, and ensuring consistency between growth and profitability. From a governance and capital market perspective, sustainability contributes to transparency, comparability, and credibility. The confirmation of ESG ratings, including ECOVADIS, Platinum, MSCI with BBB, and CDP with B, reflects a governance framework that supports risk oversight, consistent reporting and alignment with long-term shareholders. These ratings are increasingly relevant for institutional investors as an indicator of governance quality and risk management. In summary, sustainability increasingly embedded in the execution of the Group Industry Plan supports organic growth, operating discipline and risk management. and contribute to strengthening the group positioning as a long-term value creator. As we move into the final part of the Fiscal Year 26, this integrated approach remains fully aligned with the group's financial targets and strategic priorities. Now, I give the floor back to Alessandro for the final conclusions.

Thank you, Caterina and Jacopo. I will now share the final remarks and conclude our session. In a scenario where the need of technology and solution-enabling AI meets the growing requests for controlled governance and protection of data and critical infrastructures, digital demand is strongly increasing. In that environment, CESA's transformation path as digital integrator is accelerating, implementing the industrial plan and evolving its platform that enables sustainable global companies that is data-driven, digitally market-oriented and inspired by people. In the coming months, we will stay committed to the discipline and execution of our industrial plant, expanding skills and market share, with a primary focus on organic growth and digital enables adoption. In the first nine months of 26, we have achieved the target of 10% organic growth in profitability, thanks to the strengthening of our role as leading digital integrator. enabling AI automation and digital transformation by combining technology, platform and vertical application. The growth acceleration we achieve in the third quarter, with revenues and profitability increase over 10%, is the result of a clear strategic path to build a unique digital integrator in Italy, able of bringing advanced digital innovation directly into the real processes of companies and organizations. Today, it is ideally positioned to drive digital transformation and to support the adoption of AI across its customer set of over 40,000 clients. In particular, in the first nine months of 26, we underlined the achievement of the following main strategic goals. First of all, the return to growth of ICTBAS with 7.2% organic growth in revenues and double-digit growing profitability, driven by the great acceleration in the third quarter alone, with revenues up 14%, EBDA increased by 22%, and liquidity adjusted up by 41%, tends to our market position as leading digital integrator in Italy. On the second hand, the 9.0% organic growth of business services sector, supported by multi-year contracts with major customers. The 20% organic growth to revenues and profit of Digital Green BAS is another goal, fueled by strong business demand resulting from digitalization and the creation of a market leader thanks to the business combination, the acquisition of Greensand last November 24. One of the main quarter achievements is the software system integration return to a VDA growth, progressively improved quarter by quarter, up 3.5% in Q3 only, with a quarterly VDA margin equal to 11.6% compared to 11.3% of Q3 2015. Finally, we deliver a 40% payout ratio by executing the 25 million buyback program approved by the last shareholders meeting and the 2% short capital cancellation, achieving at the same time a strong improvement of our net financial position up around 40 million compared to January 25. In the light of the so positive 9 months 26 trend, the progressive acceleration quarter by quarter, as well as the solid order intake in the beginning of 4 quarter 26, today we confirm our guidance for the fiscal year and April 30 26 at the upper end of the previously communicated target range, that means revenues up by 5 to 7.5%, ABDA up by 5-10%, and Group EAT adjusted up by 10-12.5% organic growth compared to pro forma figures. That means for 2026 fiscal year, around 3.6 billion revenues, 260-265 million ABDA, and 106-108 million of EAT adjusted. we will continue to execute with great discipline the 2026 and 2027 industrial plan by focusing on organic growth and the group transformation as digital integrator promoting the adoption of the digital enables and inspired by a corporate vision oriented towards sustainable growth and digital innovation as we always did in our history Thank you for your kind attention and now, as usual, we open the Q&A final session.

Thank you. This is the Chorus Call Conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their telephone. To remove yourself from the question queue, please press star and 2. Please pick up the receiver when asking questions. Anyone who has a question may press star and 1 at this time. We will pause for a moment as callers join the queue. The first question is from Andrea Randone of Intermonte.

Thank you and good afternoon and congratulations for the results. I have a couple of questions. You already provided a positive comment on the guidance. Therefore, I think current trading, I mean, February and March performance has remained positive. But I wonder if you can detail us the main ongoing trends you are observing business by business. So this is the first question. The second one is a similar comment on the sector you operate. I mean, there are some market worries in some areas, and the technology can create disruption. I wonder if you can provide us your comment on the main sector you operate, if you are observing something different. more promising or at least taking you a bit more cautious looking forward? Thank you.

Good afternoon, Andrea. Thank you for your questions. So first of all, we enter with a very strong backlog in the fourth quarter. So that means double-digit backlog for the BAS, both ICT and green, and the same for business services. In terms of trend of the single sector, we may observe a positive trend of VAS for the ICT driven by the growing role as digital integrator that combines technology with platform and application that is so crucial and critical for the AI adoption. And so that means a growing request of data governance and protection that is boosting our demand for technology and in general, data governance and protection. On the same time, it is very positive the trend of the green sector because of the transition, the energy transition is growing with a stable trend of the prices of the market. So that's very competitive to build environment and to establish plant for producing energy from renewable sources. And it is in particular important in a scenario like the scenario we are observing today. On the same time, it is positive, it is improving the process of reengineering of software system integration that is reinforcing its path in cloud cybersecurity and in general digital integration to serve in the best way as possible the AI adoption and integration. So we observe in the Q3 an increase of EBITDA, so we grew by 3.5% in EBITDA. We reported an 11.6% EBITDA margin, so that is a positive sign that we expect to confer in the fourth quarter. So finally, business services trend is driven by the great of new and several multiyear contracts with major Italian banks with several vertical applications in the field of compliance, capital market, finance, and it is very positive not only for the trend of the fourth quarter but also for the new fiscal year 2027. Our view for the Q4 and also the new fiscal year is really positive with a very strong confidence in achieving our targets for our industrial plan.

Thank you. Thank you very much. Thank you Andrea.

The next question is from Gabriele Berti of Intesa San Paolo.

Hi, good afternoon, everyone, and thanks for the presentation. AI is increasingly mentioned as a demand driver across several business areas. I was wondering, could you help us quantify how relevant AI-related revenues are today, and how do you see its weight to change in the next few years? And then more broadly, how is AI changing customer spending patterns? Are you mainly seeing incremental budgets or some reallocation from traditional IT spending towards AI-enabled projects?

Thank you, Gabriele, for your question. So when we presented one year ago our industrial plan, we underlined that the Italian digital market is is going to grow by around three and a half, four percent in coming three year period. And we underline the trend sectors. So AI is growing around 30%. It represents just half a billion on a total market of 80 billion euro. But it is crucial because the integration of AI obviously is a stimulus for the other relevant sector. There's a greater and increased demand of data management and cybersecurity, and the cybersecurity is a segment that is growing 15% in the three-year period, 2026 to 2028, every year. On the same time, the data management is another crucial sector, so that means around 10% every year. So AI, but also the growing request of local data center power and digital sovereignty may represent the two crucial drivers of growth. And in terms of turnover, so the demand of AI may target one billion euro, just one billion euro, So that is typical of every disruption. So $1 of investment in the new technology way may represent $10 of investment in technology enabling the wave of innovation. So that is the same for AI that is stimulating the total demand of IT, more or less in line with what we expect. On the same time, in terms of demand of customers, a growing demand, absolutely, in terms of data management and protection compliant with the national security rules. That is a new and, I mean, a very relevant trend for a player like us that is operating as a digital integrator. What we expect is to face a trend of the market like this in the coming two, three year period. But there is a very dynamic market that we may serve in the best way as possible thanks to our strategy of becoming the leading digital integrator in Italy and so it is not let me say, the performance of the third quarter and what we expect in the fourth quarter will be the result of our ideal strategy and market position to serve our customers in that particular phase of market evolution.

Thank you, Alessandro. Thank you.

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Okay. Thank you very much, everybody, and thank you for your participation at the conference call. As usual, we stay available for any additional information via mail. Thank you very much. Thank you. Bye-bye.

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