Tecnicas Reunidas Sa Ord

Good morning, everyone, and welcome to TR's first quarter 2025 results presentation. It's going to be conducted by our chairman, Juan Yadó, and our CEO, Eduardo San Miguel. It's going to last approximately 20 minutes, and you will be able to post your questions after the final remarks. And I'll leave it forward to our chairman, Juan Yadó.

Juan Yadó Thank you, Antonio, and good morning to everyone. And as usual, Eduardo and I will be conducting this presentation. First of all, I will share with you the main key performance indicators that we have achieved this first quarter. Following with our most important awards this first quarter, together, which is important, about how do we see our pipeline, just give some color to our pipeline. And then afterwards, Eduardo will continue with an update of the new areas of growth that we consider very relevant for TR in the upcoming years. And he, as always, will drive you through all the relevant financial figures for this quarter. I will wrap up this presentation with closing remarks. So let's just start with highlights. We have six relevant numbers here, and I have it easy this time. Let's just start with the first one. We started this quarter with an order intake of $7.3 billion. $7.3 billion. A very large percentage have to do with a very important job, which is low-resulting. They would spend some minutes before afterwards. Very important. But it very much reflects PR's capacity, quality, and delivery capacity to our customers. Obviously, this order intake translates into a very solid, diversified, And then I like to use records because this is not a race of records, but it's a very solid 14.9 billion backlog so that obviously it gives us comfort and visibility. Intake and backlog translating and that has to do to our delivery capacity and our strategy put in place over the last two years to 1.3 billion of sales. 1.3 billion of sales, which gives us a return of 56 million euros of EBIT, which translates, as we had very much anticipated, to an EBIT margin of 4.3%. All these five numbers ended up with a fixed highlight. We give some color to everything, which is the net cash position of $423 million. So six very important numbers to start the presentation. And now let's just move straight to the next slide, which is audio intake and backlog. If you see the audio intake, you know, the left side graph, quarter by quarter, it is what the business is. chunky and difficult to predict. Probably for the managers, we don't see this chunker because we see where we are and we cannot announce or book jobs until they're signed or we're allowed to. It is chunky. It is chunky and I do remember last year when we were making this presentation, you were asking me, how do you see the end of the year? Are you going to be able to replace sales? How do you see the awards, etc., etc., etc.? But if you see them all together, last year was a very successful year in terms of awards, quarter after quarter, with quality, diversification, and customers and regions. It was a very good year. And this year, some of the queries and anxiety that there was So, you know, that was reflected last year has disappeared because we have started with two very important awards. Two very important awards. The business that we want to be, which is the upstream business. Oil and gas upstream. Both, like I'm worth that, that we have already talked about before. And it's truly important. I'm going to devote some minutes to you on the next slide. These awards, you know, allow us to present the market a smooth growth in our backlog. It's a very smooth growth in the backlog that put us at a very strong position. We reached 14.9 to 15 billion backlog. This is a solid growth that allows us to give visibility to the market, to tell the market and to tell you that we're working in the products and with the customers that we want to work with. And if you see the quality of the awards, it's not very difficult to anticipate that we're going to have more. I mean, it's backlog, what it gives to the market is present and future. So we're very proud to show you this backlog. We are with whom we want to be and in the market that we want to grow. And let's move to the next slide, which is Lower Zaku. And I think there is a lot of information on this slide. If you remember a year ago, we had our Capital Markets Day in Abu Dhabi, and we decided to do it in Abu Dhabi because we thought that in that country, in that region, in the heart of the Emirates, you could see the best of TR. And it was there that we presented to you our four-year strategy, our SALT strategy. It was there where TR was performing at its best. We took you on a helicopter. Some people thought that we were maybe sure enough. We were not. We wanted to show you how we were performing in the islands. You have to learn how to perform in the big islands in Abu Dhabi. We showed you the Dash Islands, which is a brownfield. Very difficult to work on where we were working in two projects. And we also show you and we flew through a huge model yard and in this case were the models that we were designing and constructing to be delivered to the port of Anworth. And today those models are the largest models ever built and they have never gone through that port and work, you know, they're being successful, being ensemble and construction in and work is working at very good pace. Who is TR at his best? I think with this job, lower vacuum, what the customer is asking is asking again, TR at his best. They want to work with us and we want to work with them. with ATNOC Offshore, with whom we've only worked on engineering. We've never done with that division of ATNOC, which is the upstream offshore division, the most sophisticated division we have never worked before. And what they ask for us is GR at its best. This is a big job. We want to be by ourselves. It's a five-year job. and we're fully committed with the customer to try to shorten the schedule. This is a job that we have to design and deploy more than a million hours in our home office with the support of, obviously, our satellite engineering offices. Our customer will have to come to Madrid and work together on that home office engineer. To design models, they have to be transported to an island which is 100 kilometers away, which is the Al-Omyra Island. This is a green field. This is no dash island. It's not very far from the one you have seen, some of you, through those helicopters. And on this job, you will see, as we prosper, the best of TR, by yourself, working for ATNOX. to whom I'd like to thank on this presentation. And you'll see the best of TR. Models design, offshore business, oil and gas upstream development, and big logistic efforts to reduce those five years by a few months and make this job as profitable as we can for our customers. Very important job. And so I think we can move to the next slide. And with that slide, we can, you know, after that success story, which is that I would just move of where we are in terms of commercial front or pipeline. The momentum, as I said in my notes, is extremely solid. Obviously, there are micro uncertainties in the market, but, you know, our customers, asking us to bid, and we're very actively bidding for more than 66 billion euros of our pipeline. The pipeline is very much diversified, very much diversifying customers and geographies. It is surprising that almost 30% of that pipeline comes out of North America. which is I'd like to start because geographically it is there. None of it, I mean, not everything will be EPC. So maybe, you know, as you know, in North America, we'll be working EP construction management, engineering, construction, and procurement services. We're going to be partnership construction schemes. But that North America includes Canada, where we're already working there, doing engineering with important customers, includes the United States, includes Mexico, and includes Panama, where we're already working there with an American customer, which is part of our strategy. So this is the extended North America, not only the United States. But it's very important that we very much focus on that region. Fifty-five percent. And we've always said we like to be there, and we want to be there, and we're going to grow there. It is the Middle East. And it is the Middle East in all, in petrochemicals. It is the Middle East in gas. It is the Middle East in transition energy, big time. And it's the Middle East where we're very well known, and we know how to deliver, and we know how to perform well. and our customers know so. And obviously, the rest, Europe, which is Germany. Obviously, we continue. We have expectations of growing in Germany. We're growing in the rest of Europe. And obviously, Latin America, it's always a land that gives us opportunities here and there, and we're always very well positioned. Remember, you have seen Vaca Muerta. You have seen that we're working through. You have seen that we work in Chile. And we have strong and solid opportunities in Latin America. So this is something we shouldn't forget. I mean, the geography is split, but I think let's not forget about decarbonization. On this slide, which has a lot of information, it is very relevant that we have split on regions 15 billion of future extremely tangible opportunities. which are very close related to decarbonization, and that of which 2 billion correspond to opportunities which are pure service project, which is 2 billion in pure service project. It is a lot. Don't compare it with BPC. Purely focused on track and services business units. Very much aligned with our SALTA strategy that we are presenting quarter after quarter. And after this presentation, highlight, awards, and pipeline, I leave the floor to Eduardo, which will continue with the presentation.

Thank you, Juan. Good morning, everyone. Johan has outlined the opportunities that we foresee in the coming years. A 66 billion euros pipeline is a number that brings us a high level of comfort for the short future. But in TR, we all believe there are three areas that demand a bit more dedicated analysis to understand well its full potential. We are talking about the USA, the power unit, and the energy transition. First, the U.S. market. For a company like ours, the new energy policy implemented by the U.S. government can only be considered as a unique opportunity. Traditional energy sources, and more specifically, oil and LNG, will be the primary investment drivers during the next five years. linked to artificial intelligence and data centers will be the other driver. All those areas where we have a solid expertise recognized by Tier 1 clients outside and inside the U.S. Also, as you are aware, we moved our headquarters in North America from Calgary to Houston when we did it. The purpose was to, our primary strategy was to focus in the carbonization projects. In this sense, we still see blue ammonia will play an important role in the medium term. We will leverage our commercial effort on the proven track record and a strong recognition from our US customers. We are also closing alliances with construction partners that consolidate our proposal for the American market. We currently have a 10 billion euros pipeline in the U.S. It is a very solid pipeline, and we are confident we will capture a part of it. In fact, we are already involved in a number of fits and prefits that could potentially be converted into larger projects. To summarize, I would say The volume of opportunities we are facing now exceeds by far our original expectations. Second, the Power Business Unit. Last year, when we were in Abu Dhabi in our Capital Markets Day, we devoted an entire section to explain the importance of this business unit to us. But in the past, TR has always considered power generation and specifically the construction of gas combined cycles as a solid and reliable activity that delivers consistent margins but without a significant growth ahead. But today, in a world that demands electrification for environmental and artificial intelligence purposes, this view has become absolutely obsolete. There is and there will be a huge demand for our power services because of three reasons. First, TR has more than 50 years of experience in the execution of power plants. No one else has this track record. Second, TR has strategic partnerships and works today at the same time with the four turbine suppliers in the sector, GE, Vernova, Mitsubishi, Ansaldo, and Siemens. And third, PR already has a strong presence in all regions of the world where we believe the demand for electrification is going to grow, basically U.S., Middle East, and Europe. The pipeline we have identified for the upcoming 18 months amounts to 12 billion euros. Again, we are confident that we will be successful capturing a part of this pipeline. The power unit Our unit will finally be a very relevant part of our P&L and our margin in the next decade. Authority energy transition. We believe there is an excess of pessimism regarding decarbonization. It is a fact that there are delays regarding the final investment decision of many projects. And it is also true that the time needed to obtain a final investment decision from our energy transition clients is much longer than the time required by our traditional clients. But aligning all the drivers of this huge new business cannot happen overnight. Tecnica Ronillas and TRAC are already well positioned to become a major player in decarbonization, with expertise already in place in three areas, blue and green ammonia, carbon capture, and sustainable aviation fuels. In those three areas, we see clients with a profitable business plan trying to find the right momentum to launch their investments. And again, Like in power generation, all these investments will mainly happen in three regions where we already have a solid experience executing projects, Europe, North America, and the Middle East. As I said before, the energy transition is progressing slowly, but it is here to stay. I am quite sure that these projects will be an important part of our backlog in the coming years, as we are already working with a pipeline of more than 15 billion euros. And regarding the energy transition, I would like to highlight the recent agreement that TRAC has signed with DVVA. As announced a month ago, TR and DVVA have signed a memorandum of understanding with the aim of promoting the development of initiatives and projects linked to the energy transition and the decarbonization of the economy. This agreement establishes a collaboration framework to strengthen the business of track by identifying additional growth opportunities and to search ways of financing this growth. And why the DDVA? Because the bank has set a target for its sustainable business pipeline of $700 billion for the next four years. $700 billion for the next four years. a figure that more than doubles its previous target of $300 billion for the period 2018-2025. We firmly believe this mode will provide us solid support for the expansion of energy transition activities. And now let's move to the financial chapter of the presentation. Net sales of the first quarter reached 1.3 billion euros, 30% higher than in the first quarter of 2024 and 6% higher than in the previous quarter. It is not a surprise. The current backlog enabled PR to achieve one of its highest quarterly sales ever and provide strong revenue visibility for the coming quarters. The first quarter has grown up to 56 million euros, an increase of 40% compared to the first quarter 2024. And more relevant, debit margin versus sales is already at 4.3%, moving towards the 4.5% we expect as an average for the year 2020. I would also like to point out that we did an analysis of the impact that tariffs imposed by the U.S. could have in our backlog. And the outcome of this analysis is that there shouldn't be a relevant impact in our costs due to this fact. To summarize, the first quarter has finally been a quarter of significant growth, both in terms of sales and margins, aligned with our guidance for the full year 2025. and balance sheet figures are improving as well. The net cash position at the end of March 2025 increased to 423 million euros, a level that compares to 333 one year ago. Cash conversion of profits and the improvement of payment terms contribute to this growth. But once again, and I'm extremely sorry for being so repetitive, I would like to emphasize that in the current market scenario, where customers are asking us to execute fast track projects, the smartest use of cash is not to accumulate it in our balance sheet, but to transfer it to suppliers and enable them to accelerate their work as much as possible. Regarding our equity, we continue to strengthen it And we ended this first quarter of 2025 with a sound position of 626 million euros, including CEPI's PPL. If we don't consider it, we already have reached a figure above 450 million euros. So we are solidly back to pre-pandemic levels. As a summary, financial figures reflect well the healthy operations of the company. And now let me give back the floor to Juan for the final remarks.