Spie Sa Ord

Good morning, ladies and gentlemen. Thank you for joining us today for H1 Results Conference Call. I'm joined by Jérôme Vanhoef, our Group CFO, and I'm also very pleased to welcome Alexandra Bonazel, our new Head of Investor Relations. Our first half results confirm the strength of our model, the relevance of our strategy, and the quality of our execution. Energy transition and digital transformation are firmly anchored as lasting growth drivers across our markets, and it does allow us to confidently navigate the current geopolitical and macroeconomic uncertainties. To begin, I would like to share a few recent contract examples that reflect this positive momentum. In Germany, SPIE is delivering the full technical installation for a new 16 MW data center in Schwalbach, near Frankfurt. Some of the waste heat generated during operation will be recovered and fed directly into the municipal heating network, creating a highly efficient and sustainable energy cycle. This project also integrates a number of eco-friendly features, such as rainwater collection for outdoor irrigation, a vegetalized facade, and an on-site photovoltaic system. The project is designed to achieve a power usage effectiveness below 1.2 with 100% system availability. In the Netherlands, we installed a 500 kWh modular battery system to support EV charging at Volvo's headquarters. This solution allows Volvo to store electricity from both solar panels and the grid during off-peak hours and release it when demand is high, effectively addressing grid congestion and ensuring a more reliable charging process. The project includes data collection and smart energy management to support the shift towards a fully gas-free and sustainable energy system. It is a step forward in Volvo's global ambition to reach net zero emissions by 2040. In Poland, SPIE carried out the installation of mechanical and electrical systems in a large industrial complex near Lodz. The project features a unique heating and cooling system with six outdoor air source heat pumps generating 3.6 MW of power. This project showcases SPIE's ability to deliver demanding installations covering a large scope from industrial gas systems to fully integrated building management systems with the effective collaboration of our specialized subsidiaries in Poland. In France, SPI Nucleus signed a contract as part of the consortium to carry out ventilation systems study for EPR2 reactors. The contract is part of the plan to build six new EPR2, so new generation reactors in France by 2050 to support the country's low-carbon energy strategy. And this contract is SPIE's active contribution to this new program. It is the second contract for SPIE linked with the new EPL generation. Now moving to the key H1 highlights on slide 6. Revenue increased by 5.8% with a solid 2.4% organic growth. EBITDA margins stood at 6%, reflecting a new step up of 40 basis points. Our structurally negative working capital improved over 12 months, highlighting our steadfast focus on financial discipline. As a result, leverage ratio decreased significantly compared to June last year, with a historically low H1 seasonal re-leverage. Bolton and M&A activity remains sustained with 96 million euros in annual revenue acquired, focusing on attractive markets. Finally, these H1 results strengthen our confidence to meet our 2025 targets. We even firmed up our margin guidance to at least 7.6%. Taking a closer look at the key figures for H1, Revenue amounted to 4,979 million euros, up 5.8%, as I said. Growth was well balanced between a 3.8% contribution for acquisition and a 2.4% organic growth. EBITDA was 301 million euros, that is another double-digit increase of 13.2%, and also a new margin step-up of 40 basis points after the 50 basis points achieved in 2024. Our margin trajectory is extremely solid and this is a core strength to our value creation model. On the balance sheet side, as I mentioned, the average was down by half a ton over 12 months to 1.9 times EBITDA at the end of June 2025. And now focusing on revenue growth, At constant exchange rates, revenue grew by 5.9% in each one, driven by two segments. Germany, which once again delivered very high growth of 15%, well-balanced between organic growth at 6.6% and the contribution from acquisition at 8.4%. Northwestern Europe, which also performed strongly, with revenue of 8.9%, driven by strong organic growth at 8.1%. Meanwhile, France continued to demonstrate good resilience with revenue down only slightly by 0.8%. Central Europe grew by 0.9% driven by a 5% contribution from acquisition offsetting a minus 4.1% organic decline. Global services energy reflected normalization after an exceptional H1 2024 which has benefited from a one-off shutdown maintenance contract. Overall, this performance underscores the strength and balance of our multi-local, multi-technical model, which continues to deliver across a range of geography and market environments. Moving to the margin page, we delivered another step-up of 40 basis points, reaching an outstanding 6% in H1 2025. All segments contributed positively, 40 basis points in Germany and as much as 100 basis points for Northwestern Europe. Once again, this margin expansion reflects our unwavering focus on rigorous contract selectivity, pricing discipline and high-quality execution. It was also supported by a favorable mixed effect from very strong growth in transmission and distribution services and by the slightly accretive contribution from some acquisitions completed in 2024. So talking of acquisitions, in H1 we signed three new acquisitions. Eltec in Poland, adding 19 million euros in annual revenue, transcending our capabilities in building automation and management systems. SD Fiber in Switzerland, adding €70 million revenue in the fast-growing fiber optic services market. Rovitec in the Netherlands, €7 million revenue, complementing our data center offering in the country. And meanwhile, the integration of all 2024 acquisitions is progressing well and fully in line with our plans. Looking ahead, we maintain a robust pipeline of Bolton acquisition opportunities providing good visibility on sustained external growth momentum in a highly fragmented market. Turning to the segment and starting with Germany, with a 15% revenue growth in H1, Germany is now our number one revenue contributor. High voltage recorded very high growth supported by exceptionally favorable project phasing in H1. Technical facility management delivered a solid performance with energy efficiency firmly established as a lasting growth driver. In building solutions, the example I showed earlier does illustrate our strong position in data centers, while our transport infrastructure business is also a strength. In industry services, performance was solid as well, driven by our sector-specific positioning, focused notably on pharmaceutical, wind, and LNG projects. EBITDA margin increased by 40 basis points to 5.6%. This improvement reflects a favorable mixed effect from the strong growth in high voltage, the accretive impact of acquisition completed in 2024, as well as a relentless focus on operational excellence and contract selectivity. In France, Revenue was broadly stable in H1, demonstrating strong resilience in the subdued local macroeconomic context. Only two divisions saw a decline in H1. City networks with the ongoing ramp down of mature fiber optic rollout activities. Building solutions where we kept a high level of selectivity and secured a solid backlog of quality projects. TechFM continued to benefit from a solid recurring revenue and long-standing relationship with high-quality clients. Industry and ICS both confirmed their resilience thanks to diversified sector exposure and the mission-critical nature of the services they provide. Lastly, nuclear services posted a solid performance supported by strong execution of the maintenance programs. EBITDA margin improved by 10 basis points, which clearly demonstrates how lean and flexible our cost structure is. Moving to Northwestern Europe, we delivered an outstanding performance, both in terms of revenue growth and EBITDA margin improvement. Organic revenue growth was very strong at 8.1%. EBITDA margin increased sharply by 100 basis points, the highest gain across all segments, to reach 6.9%. The Netherlands indeed delivered an excellent performance, confirming strong positioning on key markets such as high-voltage energy efficiency for buildings or data center services. In Belgium, high-voltage services are emerging as a key growth driver. supported by a step-up in grid investment from the national TSO and booming demand for battery energy storage systems. Building solutions and technical facility management also contributed meaningfully to the performance. In Central Europe, revenue grew by 1.6%, entirely driven by a 5% contribution from acquisitions, mainly in Poland. Organic growth was minus 4.1%, but is expected to turn positive in the second half, supported by high backlog. In Poland, revenue was impacted by delay in project execution in high voltage. That said, the outlook for this activity remains very positive, driven by high energy transition adjustments. Austria sustained a high level of activity supported by strong momentum in transport infrastructure as well as in transmission and distribution services. Overall, the EBITDA margin increased by 30 basis points in H1, reflecting the continuous focus on operational excellence and a strong contribution from Austria. And lastly, Global Services Energy's revenue declined by 8.2% due to an exceptionally high comparison basis in H1 2004, which has benefited from a one-off shutdown maintenance project offshore Nigeria. Business trends were solid natural gas maintenance activities. In offshore wind energy, commercial momentum is positive as we are leveraging our expertise and technical capabilities following the integration of Coral Group. EBIT margin increased by 20 basis points to 8.6% in H1 2025. And I will now hand over to Jérôme, who will comment the financial results.

Thank you, Gauthier, and good morning, everyone. Starting with a quick overview of our first half financial performance, we delivered revenue of 4,979,000,000 euros, up 5.8%. This performance reflects a healthy level of organic growth, notably in Germany and northwestern Europe, and proven resilience in France. External growth accounted for 3.8%, mainly including the contribution from the 2024 acquisitions. Pebita reached 301 million euros, increasing sharply by 13.2%, underpinned by a 40 basis point margin step up to 6%. The negative net income for this first half of the year due to the impact of our Ornan convertible bond that I will comment later on, I would finally highlight our adjusted net income at 167 million euros up 5.7%. Moving to our revenue bridge, which provides for a breakdown of our 5.8 revenue increase. As already pointed out, solid organic growth at plus 2.4%. The M&A contribution from the 2024 acquisitions, as well as the ones consolidated for the first time in H1 2025, supporting our revenue growth by plus 3.8%. The limited impact from the disposal at the end of last year of a small Belgian IT support business which accounts for minus 0.3%. Currency effects were close to neutral over the period. Let me now comment on our adjusted net income for the first semester. At €166.6 million, adjusted net income was up 5.7% year-on-year, supported by the strong increase in EBITDA. The progression was, however, partly held back by an unfavorable FX gain and loss balance during the period, and this at the level of global service energy that was especially due to the evolution of the US dollar-euro parity. Our normative tax rate is kept identical to the one we retained for the full year of 2024 at 29.2%. So solid results overall despite exceptional FX-related impacts. Turning now to our reported net income, which was exceptionally and quite significantly impacted this semester by the non-cash accounting loss due to the IFRS treatment of our Ornan convertible boom. Given the sharp increase in our share price over the period, we recorded in our P&L a negative fair value adjustment for the Ornan of around 160 million euros. This was mitigated by 41.9 million euros deferred tax assets. As a result, our reported net income stood at minus 13.4 million euros for this first semester. By the way, let me remind you that this Ornan accounting treatment is a particularity of the IFRS, obviously not considered under US GAAP. Without this on-hand accounting effect, our reported net income would have amounted to a positive €107 million compared with €57 million last year. Given the significance of this accounting impact, let's delve a bit on this topic. And before we get more technical, two major principles you need to have in mind on convertible bonds. One, when it is out of the money, meaning share price is lower than conversion price, the issuer, in our case SPI, remains liable for the nominal amount of the instrument. As soon as it is in the money, the value of the convertible bond in our balance sheet does increase, and this proportionally to the share price. To be more specific, the derivative component of the Ornan is revalued at fair value at each closing, based on SPI's share price. SPI's share price rose sharply from €30 at the end of December 24 to €47.7 at the end of June 2025, thus significantly surpassing the €32.43 of the conversion price set for this Ornan convertible bond, and thus leading to a significant increase in the fair value of the derivative instrument recognized as a liability in our consolidated balance sheet. I remind you once again that this is strictly non-cash IFRS accounting entry. remaining non-cash at redemption and this at the end of the issuer in me in other words at our hand as already disclosed at the time of the issuance of this ornan the potential dilution at redemption assuming mixed redemption in cash and in shares would be very limited if we retain 145 percent premium to the conversion price meaning a share price of circa 47 euro, the one-off dilution would be limited to 2.3%. Turning to working capital, which remains a structural strength of SPIE's business model. As you know, we consistently operate with structurally negative working capital throughout the year. Compared to last year, we further improved entire working capital performance with a 10-day reduction from minus 17 days at the end of June 2024 to minus 27 days at the end of June 2025. This improvement was observed in all working capital items, of which a very effective working progress management, which evidences a strong invoicing discipline and cash collection overall. Moving on to free cash flow, the starting point is obviously our growing EBITDA by more than 13%. As mentioned, our strong working capital performance translated to a limited cash outflow of 277 million euros, a significant improvement compared to the first semester of last year. As a result, operating cash flow turned even positive for the first time in H1, and this considering the usual cash flow seasonal pattern of the group. Free cash flow improved accordingly to minus €109 million to be compared with minus €211 million in the prior year. In line with our commitment to optimizing value to shareholders, We also executed a 39 million anti-dilutive share buyback program in the first quarter at an average price per share of circa 31 euros. Overall, our net debt increased over the first half by 347 million euros. With our leverage ratio, I'm moving to the deleveraging page. With our leverage ratio down to 1.9 times at June end compared to 2.4 times a year ago, we further evidenced the deleveraging power of our cash-generative model. It also marks an exceptionally low H1 seasonal deleveraging, only 0.3 times compared to December end. Lastly, to conclude my part, a word on our financing structure. In May, we successfully refinanced our 2026 bond with the assurance of a new five years, 600 million euro sustainability linked bond. It was largely oversubscribed. It carries a fixed coupon of 3.75%, implying a spread below 150 bps. which by the way rather belongs to investment grade issuer category. SPIE's entire debt profile with this new bond is now fully sustainability linked in line with our mid-term ESG targets. 81% of our gross debt is now at fixed rate with a weighted average cost of such a debt at 3.4% over the first semester. High liquidity level ensured all along the year with, at the June end, 1.3 billion, including 295 million euros in net cash and 1 billion euros of undrawn credit lines. Our shareholder returns continue to improve, starting with the inaugural 39 million euro share buyback program, as well as the successive dividend payments of 75 cents and 30 cents corresponding to the, for the first part, the final 2024 dividend payment and to the 2025 interim dividend respectively. Thank you for your attention. I now hand over to Gauthier.

Thank you, Jérôme. Based on this H1 results, we confirm our full year outlook and we even frame up our margin guidance. So we expect strong total growth, pushing revenue well above the 10 billion euro mark, supported by further organic growth and active Bolton M&A. We now expect an EBITDA margin of at least 7.6%. And as every year, we intend to maintain a dividend payout of around 40% of adjusted net income. Thank you very much for your attention this morning. And in case you would have forgotten, let me repeat it once more. It is a very good time to be a European electrical engineer. And with that, we are now ready to take your questions.