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.

Hello, everyone, again. I think these presentations I like to send to messages. You know, this is a good presentation. It is thanks to the effort made by all TR professionals or TR employees that has allowed us to have today a very solid backlog of 15 billion employees. A 15 billion euros with the strong risk mitigation measures that we have put in place, which give us visibility for the coming next month, very much aligned with our SALT strategy. And it's also a message of good and solid delivery of our projects, which translates into a good and solid profitability growth. This is allowing us to increase our operating margins and again meeting our targets very much in line with our SORTA strategies. With these two messages, I feel very comfortable to reaffirm first our 2025 guidance of sales of more of 5.2 billion euros and an EBIT margin in the range of 4.5%, as Eduardo has said. And second, we have an ambition, which is more consultancy term, but we have an objective, full objective, of increasing our sales levels above 5.5 billion euros and an EBIT margin above 5% in 2025, and a very firm commitment of returning to a dividend paying policy. So this is the solid margin. And as we've talked before, you remember well that about a year ago we had a capital market date in Abu Dhabi, and this is the same day date. I mean, we're planning, we have already decided, to organize a short Capital Markets Day, getting together here, our premises in Madrid, to have a simplified version of a Capital Markets Day where we could revise the status of our SALTA strategy. I think it'll be a very good opportunity to sit here for a few hours in our premises and to really understand who we are, what we are and who we're working for, and what are our ambitions to be in the very near future. And with this message, very important, with this saving the date, save it please, I'll open the floor to any questions that you may want to pose. Thank you very much.

Thank you. And ladies and gentlemen, the Q&A session starts now. If you wish to ask an audio question, please press star 1 on your telephone keypad. Again, that would be star 1 to ask a question. And your first question comes from the line of Ignacio Dominic with JB Capital. Please go ahead.

Hi, guys. Good morning. Thank you for taking my questions. The first one is on the 2025 outlook. You reiterated the guidance, but if we simply analyze the first quarter revenue figure, you appear to be comfortably on track or even there's a chance you could exceed this So you could elaborate on the key drivers you see supporting the space of execution, especially taking into account that in the last nine months, I think you've been awarded somewhere north of 8 billion euros in projects. So I would assume that some of these will start to accelerate in the coming months. And then my second question is related to the with the current macro outlook. I think, Juan, you mentioned a 24-month commercial pipeline of 66 billion euros, which is slightly below what you presented in Abu Dhabi last year. But, of course, there's been a significant amount of awards since then. So if you could give us some color on what you are currently seeing in the the market particularly from a client activity and bidding perspective and also in terms of of your activity okay being more a downstream focus if this should help mitigate a bit the impact on the on the regional price volatility that we are seeing thank you

Thanks for the question. First of all, when we are predicting 5.2 billion euros for the year, I think this is something like a 15% increase compared to last year. So first, we are already predicting a very material growth for the year. you're Spanish, you will understand the joke. I want to go match by match, quarter by quarter. And it's the 15th of June. Sorry, it's 15th of May. I already know it's going to be the volume of sales of this quarter, of the second quarter, and it will be again 1,300 or give or take. It will be around that figure. So, you know, it's not good to predict. Since you have grown in the last quarter, you will grow again next quarter. No, it doesn't work in that way. But I will give you something that is important for me and for all of us. There are no list of three big projects in our backlog where the clients are demanding to construct the projects under fast track schedules. And we need to sit with them and analyze if potentially this could impact in the delivery of revenues within this year, 2024, because we need to accelerate somehow. But we need to sit with the clients. For the time being, our guidance is 5.2, and I think it's a fair number. And the second question, I will leave Juan to answer you.

Yeah, I'll try to answer the question the best I can. I don't know if I get a full feeling of what I have to answer to you. But, I mean, obviously, if you compare pipelines, it is very difficult, obviously, to take into account that of the 72 to just ourselves, we have taken a chunk of $9 billion in sales. I mean, in awards. So that has been taken out. But it is growing. It is a moving target. Pipelines is a measure of where we are and who we are. Some of the pipelines are EPCs, some others are services. Our service building is growing and is growing very fast. So it's a variable. I mean, 66 is big. It is solid. It is two years of the jobs which reflect the opportunities that we already have engage with customers. This is not market size. These are the real opportunities that are, which most of them were fully engaged with the customers. We're pre-qualifying, being pre-qualified, bidding, discussing, so it's 66 billion is very good. After a year, I lost the feeling of what it meant 72 of a year ago. All I can tell you that we have been successful and we have taken a chunk of $9 billion from that date that we presented our numbers, which is good. If we're focused downstream to protect ourselves, I'm not sure what we have to be protected of. I'm a bit lost. What I can tell you what we focus on, we're very much focused, which we continue being demanded of gas developing jobs, Gas continues to grow from conventional gas and unconventional gas. In the middle, it's big time. And because it's needed for the downstream, it is needed for the petrochemicals, on which we're already focused. And you have seen some very important awards this year. And you will continue to see awards as we move forward as fully downstream petrochemicals. And also, gas is needed for power. There is a big need of power everywhere. for both concrete, you know, for the need, that's the Middle East, and also for the growth of the data centers. There is a big, there is a shortage of power. And that power is very closely related to gas development. And obviously, we're growing, and as Eduardo has said, you know, quarter to quarter, month after month, customers have come on transition, energy transition in general. We're moving very, very much on decarbonization and different sorts of biofields. So this is what we focus on. We have not lost track, and I don't understand what you mean by protecting ourselves, but we're happy on what we very much focus. I mean, we're very much demand it.

And Ignacio, do you have any follow-up?

Thank you. Thank you very much. I just mean protected on the CATEX flexibility in upstream, which I would assume you are a bit more protected, given the nature of your pipeline.

Thank you.

Yeah, if you mean if we were protected from upstream or whatever, you have to realize that the pure upstream, which is drilling and production, we are not in. So if you mean that, yes, we're better protected. We're more resilient to the market in that sense.

Thank you.

And your next question comes from the line of Kevin Roger with Kevlar Shibu. Please go ahead.

Yes, good morning. Thanks for taking the time. The first one was also related in the sense on the phasing of the top line because I understand that many things can happen, etc. But mechanically on the paper, should we agree that when the backlog is increasing and providing record visibility, it will mean that sequentially the quarterly revenue will increase and so that in that sense, when you say that the top line will be at 5.2 billion, you remain cautious on the projection that you are arguing for 2025. It's maybe to try to understand a bit more if there is some cautiousness or whatever in the numbers that you provide. And the second one is maybe just, if I missed it, sorry for that, but just on the financial expense that were relatively high this quarter compared to say the past year so to understand if there is a kind of one-off and what we should consider for for the full year as a financial expense please okay um you're right backlog is growing but as i said before

The guidelines is growing as well. I mean, last year we closed in 4.8, if I'm not wrong, and now we're predicting 5.2. That's a growth of 15%. And it's true also that the backlog has grown above this 15%. I don't think we are being too conservative. I mean, we make our numbers. And to be honest, I think for the time being, you should follow our advice. 5.2 represents what we're expecting for the year. But again, and I think, you know, that's my main concern because I'm sending Mark that message today. But there are two projects, three huge projects, huge projects in the Middle East that we are sitting, we are about to sit with the clients trying to find how to save time because clients are somehow desperate to accelerate the project because they want the project to start delivering. And probably it can impact, but it is something that we cannot tell you now because unfortunately we do not still see clear picture of what they want and about what can be done. But obviously we are trying always to be conservative because we don't want to make mistakes, but please don't believe that there is a hidden volume of revenues now that we don't want to anticipate. Once we know where the new projects or these new projects accelerate will end, we will be telling the market what is the correct number for the year, okay? That's the only thing I can tell you now. And regarding financial expense, I think there is not a one-off. We have a problem there. There is a one-off regarding hyperinflation in Argentina, I think, but I don't know how relevant this is because it's around 2, 3 billion euros this quarter. It has more to do with the cost of the PPL we have with the Spanish government. This hybrid loan has a cost now of around 8.5%. It's extremely expensive. and that's why we have told the market many times that we perfectly understand that it's very convenient for us to have the government by our side because clients see us as a more reliable company. That's a fact. But simultaneously, we understand that the cost is too high, and we need to find the right moment to repay it. And the message was clear one month ago, two months ago, when we were closing the figures of 5%. of December, last February, and the message was, next September, we will be telling you exactly when we are going to repay the PPL. That's the idea. But we want to analyze everything carefully. Please, you know, we are managing a backlog of 15 billion euros. There are very big opportunities ahead of us, and, you know, it's complex how to manage the cash, how to manage the PPL, The revenues, we need 50,000 people to deliver this backlog. You know, we're managing very significant figures, and we have to be careful. But regarding your question, the problem here or the big impact here has to do with the PPL that in the worst scenario will be repaid next June 2026. So it will last another 12 months. That's the worst scenario.

Okay, perfect. Understood. Thanks for that.

Thank you. Your next question comes from the line of Robert Jackson with Bankos and Thunder. Please go ahead.

Hi, good morning, everybody. My question is related to you, Eduardo. I know it's related to the North American backlog. It represents 30%. That's very surprising, a positive surprise. I know you've been traveling and doing a lot of work in the U.S. looking for opportunities. That was pre-Trump. I don't know if what you saw in the US then and what's in the backlog now, there's any risks that things could change. And then what's your strategy for the next 12 months in terms of doing more commercial activity in the North American market so we can better understand where the North American market is heading in your pipeline? That would be my main question.

Hi, Robert. Good question. First of all, I think we need to split the pipeline between a number of countries. Because when we talk about North America, as Juan has explained, we're talking about Canada, United States, Panama, and Mexico. 28% of 15 million euros is around 18 million euros. 18 million euros, half of this amount comes from the States, but the other 8 billion has to do basically with projects in Panama, Mexico, Canada. The good news regarding those three countries, except in Mexico, is that we're talking about projects that have been launched by American customers. So it is the result of our activity in the States that we can obtain new projects, win new projects, in the surrounding countries. If we go to the United States, where I believe is where your question is going to, it's a fact. Who can deny that Mr. Trump has an impact in the economy and in the strategies of the companies around the world? It's a fact. The energy transition world, you know, the feeling we have or the feeling we had that everything could be booming soon. You know, obviously it has been postponed, but it's also a fact that there are plenty of European players or American players that are willing to export blue ammonia from the States to Europe. And because of the IRA's support, it makes a lot of financial sense to keep on investing in those activities. So it's true that everything seems to move slower in the United States, but I see the European clients and the American partners being very firm in their investment decisions. The only problem is They need some time because under the actual uncertain scenario, they need more time to be sure about the outcome of the price they are going to invest in. But they are firm. Believe me, they are very, very firm. That's regarding the energy transition. And regarding the other potential investments and activities, it's true that everyone is a bit concerned about what's going to happen because of the tariffs, you know, the The policy of Mr. Trump has been a bit aggressive, but they are taking their time, but they are willing to invest. What is extremely clear is that the power comes very soon. In fact, we are already bidding for a large project for one of the major oil companies in the States. And the project will be awarded within this year. And, well, it will be awarded the fifth phase. and probably will be a competitive feat, but we see the power already coming. It's here. There are many projects of carbon capture also and projects of LNG on the table. And again, the feeling we have is that the projects are there and the clients are willing to consult the plans. The problem is they need some time to be sure about everything is properly fixed in the macroeconomic and to launch a project. But honestly speaking, we haven't modified our strategy. We are very focused in the energy transition world, but also we have had the chance to talk to many clients, and they have had the opportunity to learn about our expertise in oil, in gas, in pet chem, you know, and they want to be with us. So, you know, we haven't changed the strategy, but it's the fact that the volume of opportunities is higher than it was when we were talking just about pure energy transition. We are very optimistic. Yesterday we were analyzing with the board of directors not the potential awards of 2025, but the potential awards. I'm talking about not TPCs, but big projects next year, 2026, and the states had a presence. It was relevant, the volume of opportunities. We believe we have a good chance to be awarded next year. We're more than happy with the United States now. Let me add something.

Let me add something. If you were here, if somebody made the effort to take a chair and sit in our office here at the entrance where we have a big screen where we welcome our customers when they come to visit us, you'll be seeing it didn't happen before. That's a good sign. That is very rarely the week that we haven't got here in our premises yet. an U.S. customer that some of them we have never worked before and we are already working on pre-feeds or feed studies. We're talking to the big ones that come here, they see what their premises, they launch the jobs, they audit us, which is good news, they visit us. I mean, the activity of the U.S., which is, I mean, let's be honest with you, it's a new market for us. We landed there only in reality two years ago, and in full flesh just only a year ago. And we are being, let me tell you, extremely successful. I mean, we have contracts, we have customers, we're bidding, we have strong partners, construction partners, and a lot of opportunities. And that's why we have put North America and the U.S., what are we seeing in terms of our pipeline, which is big, which is big.

Yeah, I think Eduardo, you answered my question by saying that talking to the board next year, 26, the U.S. potential awards looks higher. So that looks encouraging. Thank you very much for your answers.

Now I feel the pressure.

And your next question comes from the line of Juan Canovas with Alantra. Please go ahead.

Juan Canovas I've got a couple of questions. The first one is on those Middle Eastern projects that your customers are asking you to deliver earlier, can you give us a timeline for your decision on whether that will be possible? Also, I would like to know whether you could give us an update on your project disputes, the ones in Finland and the others, whether there is anything new on that side of things. And finally, given the huge order backlog that you have and the massive potential new backlog, how are you thinking about capacity? Are you constrained? Could you... would you really execute those projects if you got a high level of awards? That's it. Thank you.

Juan, I'll focus on the first two questions and about capacity constraints. Eduardo is going to answer you. If you ask me, it's not an issue. When you sit with a customer and you have billions of dollar jobs, you don't say, okay, let's give us three months, whether we could reduce or not the schedule. Jobs have started. Kickoff meetings have taken place. You have to pull with the long-lead items. I mean, the equipment has to be placed and see whether you can negotiate with them to deliver a few months earlier. If that's the case, you have to negotiate and find out whether all the bulk material can be on time so pure detail construction can take place. And then you have to find out and negotiate whether construction companies have enough resources to accelerate. So it's an ongoing business. So I cannot tell you whether in two months we have reached an agreement or not. You're together with the customer pulsing whether you can deliver or finish the job as the market, as following, you know, suppliers' reactions. So the message is that, and the good message, so it's a better message to see, to have customers that want to run, that customers that do not want to run. And that's an important message that we like to launch here. But I cannot answer you whether we're going to make a decision, as we don't have to make a decision in the next two, three, four months. But as soon as we fall through the customers that we can reduce, we'll be more than happy to reduce the schedule, obviously. That's what we get paid for. And it's good news. That's the message. Disputes. Let me tell you, we feel comfortable with our disputes. We do believe that this year is going to be a good year to finalize some of our major disputes that we very much focus on. But obviously, this is not the place in public to talk about disputes, and I don't like to do so. As in many cases, I have to talk about customers, and I don't think it's correct. But the message is we are comfortable that a large percentage of our disputes will be very much finished this year. And then Eduardo will

Regarding our capacity to go on growing, my answer is first. For this year, 2025, we need very few additional people. We have already done the homework, and the people we have at home is enough to deliver the existing backup. But we are ambitious. We want to go on growing, and as you are more than aware, the idea is we want to focus as much as we can in the service sector, and it is very intensive in terms of human resources. Last week, I went to Abu Dhabi, for example. I had a meeting with a top manager of Amnok, and I was visiting our premises. It was three months since the last time I was there. And three months ago, there were 250 people. I think it was 300. Now there are 500 people. So we are growing very fast in our satellite engineering offices around the world, Abu Dhabi, Saudi Arabia, Turkey. I mean, it's not that difficult to grow in those engineering offices. But the main answer to your question has to do with India. It's incredible the way we are growing in India. We already have around... slightly less of 2,000 people. I think it's 1.6, 1.7, 1.8. I don't know exactly the number today. We have an affiliate in Bangalore. We have another one in Chennai. We are planning for the next year probably or the year after to open a third one in Mumbai. You know, here we already have all the disciplines, all the engineering disciplines available in those offices. They are managed. sometimes from Spanish managers that have been expatriated there. But in many cases, the management has already been done by locals that have been working for us for many years, and now they can be the leaders of the different disciplines in this country. So if today we were willing to send a full unit to India, it could be done for sure. We have no concerns about that. It is a fact that we want to maintain always a mix between Spanish engineering and Indian engineering. But the huge potential of growth is there by far. I don't know exactly the numbers. Unfortunately, I don't have them in my mind. But in the last two, three years, we have multiplied by four probably the number of professionals we have in India. And there is room for improvement. There are other players in the market and other companies from other sectors We see the volume of human resources they manage in India, and there is no limit for this market in India. So anything we need, we can get it from that country. Saying so, the purpose is not to do everything in India. I mean, we are Spanish, we are Europeans, and we want to maximize as much as we can the volume of resources here in Spain, and that's our target. It's a fact that we probably will be opening new branches. We currently have one in Madrid, another one in Cartagena, the third one in Bilbao, and we are planning to open a new one in the short term. But if you want to capture Spanish professionals, you need to move to the cities where they are living. So we will find our strategies, but we are confident that there will be not a bottleneck in our growth because of human resources.

Thank you for your answers. May I have a very quick follow-up, just asking what data you're thinking about for the CMD update? Thank you.

Sorry, I had it written down, but it's going to be, we'll be more precise, but it's going to be the week of the 22nd. of September. That's on Monday.

Okay.

Thank you.

And your next question comes from the line with Kaisha Bank. Please go ahead.

Yes, good morning, everyone. I have just one final question regarding revenue split and if you can give us the contribution of service contract to both revenues and EBIT just to understand what part of margin expansion in this quarter is related with me. Thank you.

Hi, Philippe.

I want to be cautious. I will provide you an accurate answer to your question and everything that has to do with the future of the service division next September in our Capital Markets Day. And to give you a hint of where we are today, for the year we were planning services amounting around above 200 million euros. And give or take, in this first quarter, we are aligned with those 200. So we are in the range of the 50. 50 million euros of services. That's a number. But let me be patient because I don't still have very detailed analysis. I prefer to share it with you once I have a deep understanding of where we are and where we are going to. But again, we are quite confident that shouldn't be a major challenge to achieve the results we expect for this year 2025.

Okay, thank you. Perfect.

And we have no further questions at this time. I would like to turn it back to our presenters for closing remarks.

Okay, thank you very much for listening to this presentation. Thank you very much for posting questions and participate actively. And I think we'll be talking to, you know, all of us will be talking again on the 31st of July. with the first half of the year results. And then again, very soon, after a quick rest in September, on the week of the 22nd, which is going to be our brief capital markets gathering. Thank you very much again.

Thank you, presenters. And ladies and gentlemen, this concludes today's conference call. Thank you all for joining. You may now disconnect.