Tecnicas Reunidas Sa Ord

Good morning, everyone, and welcome to TRS Q1 results presentation. We apologize for the slight delay in our schedule. We've had certain communication issues. The presentation will be conducted by our chairman, Juan Yadó, and our CEO, Eduardo Samuel. It's going to last approximately 15 minutes, and you'll be able to pose your questions after the final remarks. I now leave the floor to our chairman, Mr. Juan Yadó.

Hello, everyone. Let me start by reminding you that in two weeks, we'll be hosting our Capital Markets Day. It's going to be in Abu Dhabi, as you know. And obviously, in this event, we'll be able to devote enough time with you to share TR's very motivating and promising growth strategies. So therefore, today's presentation will have to be shorter than usual. I will start then with a short update on our commercial pipeline, and then I'll follow with some minutes devoted to TRAC and our transition energy business. It has just celebrated its first anniversary. TRAC's division has celebrated its first anniversary. Then Eduardo would follow with financial review for this quarter. And then, as always, I will conclude with our guidance for 24. So let me start with a quick glance of our commercial pipeline. When you look at this slide, an important number is that we have a strong €72 billion pipeline for the next two years. But let me work now with you with a different breakdown of the 72 billion, which I think will allow all of us to understand how TR, by engaging early with our customers, by engaging in early contracts, is today for a better position for future and healthier awards. First, we have the first tranche, 61 billion euros of our traditional EPCs, EPs, and EPCMs, I mean our service business, which are pipeline that we're already bidding. We qualify and we're going to be bidding, obviously, in competition with other engineering firms within the next 24 months. This is a traditional pipeline, and this figure already shows that investment cycle remains very solid. The second tranche, you see there are only 1.4 billion euros, which represents several contracts that TR has already secured, negotiated, and agreed. Those are contracts that we are already working with our customers on a service basis, and eventually will be converted in EPCs when the final investment decision takes place, which we expect will be within the next 18 months. And finally, you see the last tranche of the commercial pipeline. We're bidding or we're getting ready to bid about 10 billion euros, which represent or corresponds to EPCs where we have already been engaged with our customers by executing dual or competitive fees, which means we'll have to compete with one Or there are traditional fits where customers will give us the opportunity sometimes to continue and sometimes to compete. But obviously, it's a different story when you have bidding for a bid that you have designed. And obviously, many pre-fits that we are engaging with the customers. So those are 10 billion euros that we bid in that obviously not only increases the likelihood of getting awards, but also the health of those awards. So we think that this breakdown shows well how the market dynamics have changed over the last two years. So having gone through the pipeline, which I thought it was important, let's continue, as I've said, with an update of truck. which is our Energy Transmission Business Unit. Just a few weeks ago, we were here celebrating that TR, Energy Transmission Business Unit, TRAC, was celebrating its first anniversary of the public presentation. About a year ago, we made a big presentation here with our government included of our TRAC division, and we were celebrating as such. All of us, we were extremely satisfied, and that's what we want to present to you today, what has been accomplished over the last year, and how optimistic we are for the future outlook of the business. As you know, the purpose of Creating Track was to generate more opportunities in decarbonization and focus on projects offering additional services to our customers and differentiated value. To achieve these goals, we have put together different service proposals within TRAC and obviously attracting and moving into, you know, combining new business lines, combining our traditional business lines, our traditional customers with new business lines, which is basically cement and steel. So what has happened? Let's look into the left-hand side of this slide. And we see that since first quarter 21, when all of us were learning and doing feasibility studies about this market, CR has accumulated more than 300 million euros in awards of engineering services, fully devoted to a low-carbon project. And we tell you 300 million euros in services is a lot. Especially in this business, as you know very well, it's a very slow-growing business or developing business. What that means in terms of resources, what that means in terms of where are we? If we look into the right-hand side, we see that we have been very successful in developing these three lines of low-carbon business that we're very good at. We're very good at green hydrogen, and we have been successful. We're very good at biofields, and we have been successful. And we're very good, and we need it for the low-carbon capture business, and we have been successful. And let's see what that means to researchers. I mean, why are we successful, and why are we needed? We're needed because engineering resources are needed to really tackle this business. That means that we have deployed 1.8 million engineering man-hours. which are fully focused in this fast-growing market, which if you translate that into people, into engineers, into chemical and process engineers, that means that about 1,000 engineers are focused in TR in this business. So this is only where we are. And then let's just put just one quick slide to tell you where are we going. So now let's just look into the next slide. on the right-hand side as well to see where we're going. A couple of minutes ago, I told you and I showed to you that we have a pipeline for the next 24 months of 72 million euros. Well, within this year, 2 billion euros actually corresponds to projects already focused in low-carbon technologies. Let me tell you that two years ago it would have been very difficult for me and for my whole team to have that figure in front of all of you. Also, it's important to highlight that we're greatly widening our client base. Today, we have customers that we didn't have before, which is very important. And a big portion of these investments will be undertaken, as I've said before, with companies outside our traditional oil and gas base, allowing us, in many cases, to work and develop those EPCs hand-to-hand, co-developing with our investors, which was, you know, as I said before, a differentiating strategy. So I think this is my whole presentation, strong pipeline, good breakdown, and extremely well positioned in regrowing low-carbon business. And with this message, let me now pass the floor, or the macro in this case, to Eduardo.

Okay. Thank you, Juan. Good morning, everyone. Let's move now to the financial results. Well, this slide summarizes the main financial figures for the first quarter. In terms of sales, TR surpassed the 1 billion euro threshold with a 13% growth from our previous quarter. As you are aware, that quarter was a quite extraordinary small quarter in terms of sales due to a bigger than usual volume of projects in the engineering stage. The EBIT reached 40 million euros with a 4% margin over sales in line with our guidance for the year. And the net cash position stood at a healthy 633 million euros level at the end of the quarter. Focusing now on margins, you can see in the slide that in the last two years, we have consistently grown our operating margins up to the 4% level reported in the quarter. There are several reasons behind this positive recovery that were elaborated in previous results presentation. However, I think it is important to highlight them again because they will also be supporting the future margin evolution. First, we are more selective when choosing which projects we want to bid for. Second, we have implemented a proactive risk mitigation strategy. And third, the cost efficiency mindset has landed solidly throughout the company. We're moving to the cash net evolution. As you can see in the slide, the net cash efficient stands at €333 million. You know, one of the positive drivers that the actual investment cycle is bringing is the improvement of the cash cycle linked to new awards. And this is not only related to the revival of initial nonpayments, but in general, to a more positively balanced milestone scale for payments. And in that sense, to give you some additional color, while the 2023 full year figure included down payment of the MIRAN project, the first quarter figure does not include down payment of REJAS, of the REJAS project in Saudi Arabia. A cash inflow we expect to occur in the second quarter of 2024. The purpose of TR is not to maximize our cash in bank, but to consume wisely this cash inflows in accelerating the project's execution. It has been a short presentation, but now I give the floor to Juan to conclude with the guidance for 2024.