Maire S.p.A. (MAIRE) Earnings Call Transcript

Good evening, and welcome to the Maire's 9 Months 2026 Results Conference Call. Please note that this conference is being recorded. [Operator Instructions] I will now hand over to Silvia Guidi, Head of Investor Relations, to begin today's conference. Silvia, please go ahead.

Good afternoon, everybody, and thank you for joining Maire's 9 Months 2026 Financial Results Conference Call. My name is Silvia Guidi, and I'm the Head of Investor Relations. Today, I'm joined by Alessandro Bernini, Group CEO; Mariano Avanzi, Group CFO; and Fabio Fritelli, NextChem Managing Director. They will walk you through the operating highlights of our business units, followed by an overview of our financial results. At the end of the presentation, we will be happy to take your questions. Let me now hand over to Alessandro for some introductory remarks.

Thank you, Silvia, and good afternoon, everyone. The first 9 months of 2026 further confirm the resilience of our business model. In the Middle East, the safety of our people remains our top priority. Through continuous engagement with clients and partners, we have maintained execution momentum and proactively adapted to evolving conditions. Against this backdrop and leveraging a diversified project portfolio, we delivered EUR 5.6 billion in revenue. EBITDA margin increased to 7.4%, up 60 basis points year-on-year. This result reflects NextChem's growing contribution and the operating leverage generated by large-scale E&C projects. On the technology front, we continue to strengthen NextChem's platform through the recently announced acquisition of MEA. This addition further expands our capabilities in critical metals and materials processing, building on the Ballestra and Etica acquisitions completed earlier this year. In particular, it enhances our exposure to markets with compelling long-term growth prospects driven by the global trends of electrification and artificial intelligence. Commercial performance was also outstanding. Our integrated offering continues to support Maire's growth trajectory and contribute to our distinctive market positioning. At the same time, we are broadening our geographic reach, in particular in the Americas, and expanding into high-potential segments, including LNG. Indeed, we secured a year-to-date order intake of EUR 9 billion. We, therefore, reached our full-year 2026 target 3 months in advance. Our book-to-bill ratio stands at 1.6. Group backlog reached EUR 16.4 billion, close to record levels, providing more than 2 years of revenue visibility. This strong commercial momentum reflects clients' growing need to secure execution capacity and advanced investment decisions as energy security and industrial resilience become increasingly important strategic priorities. So now let me leave the floor to Fabio for a detailed look at the STS operational performance.

Thank you, Alessandro, and good afternoon, everyone. Over the first 9 months, NextChem recorded EUR 793.7 million of new orders. This includes the contribution from Ballestra following the completion of its acquisition in June. The order intake mix was well diversified, as you can appreciate from the map on the right. Fertilizer Technologies represented the largest share, also thanks to the sizable awards of Fertil Pampa in Argentina and [SAN 7] in Saudi Arabia. We also secured contracts in sustainable aviation fuel, specialty chemicals and advanced materials. These awards confirm both the breadth of our technology offering and its global market appeal. As a result, backlog increased to approximately EUR 786 million at the end of September, supported by both organic growth and the continued expansion of our technology portfolio. Among the awards secured during the period, the full urea technology package for the SAN 7 project stands out as a landmark achievement for NextChem. SABIC's selection confirms the strength of our urea platform and reinforces our leadership position in a market where technology, reliability, and track record are key differentiators. With a value of EUR 125 million, this award will contribute to the expansion of Saudi Arabia's fertilizer production in line with Saudi Vision 2030 to strengthen its role in supporting global food security. Let me now briefly walk you through the recently announced acquisition of MEA and explain how it strengthens NextChem's platform. Following the acquisitions of Ballestra and EdTech, both focused on inorganic chemistry, we have been working to further expand our presence in technologies for metals, minerals, and critical raw materials processing. These are strategic segments underpinned by the secular growth drivers linked to electrification and AI infrastructure. MEA's acquisition strengthens NextChem's capabilities in the separation, purification, and recovery of critical strategic and precious metals as well as rare earth elements. MEA brings end-to-end expertise spanning from pilot activities to the design and implementation of industrial solutions with tailor-made processes developed around the specific characteristics of primary and recycled feedstocks. Its research centers in Sweden and Germany will also become part of NextChem's innovation network, further strengthening technology development capabilities. The transaction includes an upfront consideration of EUR 4 million plus potential earnouts of up to EUR 4 million linked to future performance. Closing is expected in the fourth quarter of this year. Now I would like to highlight an important milestone in NextChem's innovation efforts. Last week, we inaugurated RomeNode, a 6,000-square-meter hub designed to accelerate the development and scale-up of new technologies. By bringing together several laboratories and up to 15 pilot plants in a single location, RomeNode advances solutions from testing to industrial deployment by combining AI-enabled scientific research, engineering expertise and industrial know-how into a single platform. Initial programs will focus on green hydrogen, sustainable fuels, low-carbon energy carriers and circular critical and innovative materials, supporting NextChem's long-term growth ambitions. The location is particularly meaningful as the facilities are based where Maire's journey began 40 years ago. I will now hand the floor back to Sandro for the operational performance of the integrated E&C business unit.

Thank you. Thank you, Fabio. Talking about E&C, let me start with an update on our activities in the Middle East. At the end of September, around 2,500 of our people were deployed across the region. The main projects with ongoing on-site operations continued to progress through construction and commissioning activities. This was supported by the availability of key equipment and additional deliveries received during the period through logistics rerouting measures. Close coordination with our clients and partners is also playing an important role in advancing project execution. At the same time, we continue to monitor and document both direct and indirect impacts of the mitigation measures supporting the ongoing management and the recognition of the related cost escalation. Looking more closely at Hail and Ghasha, the project has reached approximately 80% overall completion, reflecting the significant progress achieved to date. Civil and concrete works are substantially completed, while the main steel structure installations have been finalized. Despite challenging climate conditions during the summer and the reduced operability of the Strait of Hermes, activities continue to advance, with the night shift operations implemented to sustain construction productivity. On the logistics side, around 1,300 shipments were rerouted through alternative ports, and approximately 2,800 containers were successfully delivered in the past months. In addition, several oversized and heavy-lift pieces of equipment have already been delivered to the site, with additional deliveries expected shortly, which could support an acceleration of execution activities in the coming months. Moving to commercial performance. Our integrated E&C solutions delivered a strong order intake of EUR 8.2 billion in the first 9 months. This performance reflects the continued strength of our core markets, while we are broadening our geographic reach and expanding into new segments. In particular, we are strengthening our presence in Latin America and expanding into LNG where we can leverage our expertise in the execution of large-scale gas projects. Our E&C backlog reached EUR 15.6 billion at the end of September. It includes several landmark projects in sectors that remain at the forefront of global energy investment, including gas processing, infrastructure upgrades and petrochemicals. Looking ahead, our client continues to engage us at an earlier stage of project development, as demonstrated by the early engineering and FEED awards secured during the period. This provides us with early visibility on projects that may progress to the EPC phase later on. Let me now provide you with more details on 2 multibillion awards that were included in our backlog in the first half of the year, as certain formalities between the parties have now been completed. Starting with the rich gas development project in the UAE, a $4.3 billion EPC contract was awarded to Tecnimont by ADNOC Gas. This scope includes a new NGL fraction unit with a capacity of around 23,000 tonnes per day, enabling the recovery of higher-value liquids from rich natural gas. The award further strengthens our presence in Abu Dhabi and confirms Tecnimont's recognized expertise in advanced gas processing. Another important award was the $2.3 billion SAF project for Saudi Aramco. Our scope covers 2 packages, including onshore water treatment and injection facilities as well as associated utilities. The project is designed to support reservoir pressure maintenance and sustain the long-term production capacity of the world's largest offshore oil field, reinforcing Tecnimont's role in delivering critical infrastructure. Then, before handing over to Mariano for the discussion of our financial results, let me give you an update on our expansion into the LNG market. In the U.S., we are supporting the FEED of the Argent LNG project in Louisiana following the agreement announced in January. Subject to the client's final investment decision, the project is expected to progress to the EPC phase, with Tecnimont providing engineering, technology integration, and project management services. In parallel, in the UAE, we have been awarded a competitive FEED for the ADNOC Gas East Coast LNG facility in Fuaira, a strategic project supporting its zero-emissions strategy. Subject to the competitive process and final investment decision, this could potentially lead to an EPC award in the months ahead. Together, these 2 awards mark an important step in our expansion into LNG and demonstrate that Tecnimont is increasingly being recognized as a credible player in this segment. I will now hand it over to Mariano.

Thank you, Alessandro, and good afternoon, everyone. In the first 9 months, we delivered another period of solid growth and improved profitability. Group revenues reached EUR 5.6 billion, up 7.7% year-on-year, driven by resilient project execution. EBITDA was EUR 414.3 million, up 15.7%. EBITDA margin expanded by 60 basis points to 7.4%, reflecting both the growing contribution from higher-margin technology solutions and the operating leverage from E&C projects. At the bottom line, the strong operating performance combined with effective financial and tax management delivered a consolidated net income of EUR 243 million, up 18.6%, and an EBITDA margin of 4.3%, up 40 basis points. Group net income was EUR 208.9 million after EUR 34 million of results attributable to minority interest, mainly reflecting the growing contribution from Net and projects executed through joint ventures. Let's now analyze our financial results by business unit. The scale delivered revenues of EUR 467.3 million, up 54%, mainly driven by low-carbon chemicals and fertilizers. EBITDA was EUR 113.2 million, up 41%, while its margin stood at 23.8%, reflecting the contribution of proprietary equipment in the product mix. As a reminder, NextChem's 9-month results include the consolidation of Ballestra and ETC from the 1st of July. Moving to Integrated E&C. Revenues were EUR 5.2 billion, up 4.8%. Growth was driven by steady project execution, including the ones in the Gulf region, as discussed earlier by Alessandro. We also recorded solid progress in other geographic areas such as Kazakhstan and Algeria. EBITDA amounted to EUR 301.1 million, up 8.4%, while its margin improved to 5.8%, an increase of 20 basis points. Let's now analyze the cash flow dynamics. Our business continued to generate strong operating cash flows, providing firepower to fund growth, invest in technology expansion, and reward shareholders. At the end of September, the adjusted net cash position was EUR 51.8 million. CapEx amounted to EUR 218.4 million, primarily related to the acquisition of Ballestra and EPC. The remaining portion was invested in development and scale-up of proprietary technology as well as accelerating digital innovation. At the same time, we returned EUR 194.4 million to shareholders through dividends and EUR 85.2 million to share buybacks. On a further note, the IFRS 16 lease liability increased to EUR 440.3 million at the end of September from EUR 111 million at year-end 2025. The increase exclusively reflects the new long-term lease agreement for our headquarters at the Garbald complex in Milan, effective from the 1st of July. This is, therefore, an accounting effect associated with the new lease, which secures our presence at the site for more than 20 years. This concludes our financial review. I will now hand over to Alessandro for his closing remarks.

Thank you, Mariano. As we look ahead, we continue to see a supportive market environment. Our commercial pipeline exceeds EUR 61 billion, providing good visibility in the months ahead. We are already well positioned on a couple of initiatives through early engagement activities, which are expected to progressively convert into full EPC contracts. In particular, in the near term, South America remains a tangible source of additional opportunities. One gas treatment initiative for which we are already carrying out early engineering activities is approaching the final investment decision, and this could support an EPC award in early 2027. Looking further ahead, investment momentum is expected to broaden across several regions. The Middle East, needless to say, continues to offer significant opportunities, with large-scale fertilizers, gas treatment, and LNG projects expected to be sanctioned next year. Some of these projects can generate opportunities for both NextChem and Tecnimont as they combine proprietary technologies with large-scale execution. Europe continues to advance renewable and biofuel solutions, with opportunities also for our technologies serving the critical minerals industry. Both North and sub-Saharan Africa are seeing increasing activity in both nitrogen and phosphate fertilizers as well as gas infrastructure, while North America remains an attractive LNG market. Overall, this diversified opportunity set reinforces our confidence in the sustainability of our growth beyond the current backlog cycle. In conclusion, our 9-month results confirm the solidity of our business and the strong commercial momentum across the group. Based on our performance to date and the planned activities for the remainder of the year, we confirm our 2026 guidance. In particular, we expect project execution to remain resilient in the fourth quarter. In the Middle East, the mitigation measures implemented in close coordination with clients and partners are expected to support further project progress. At the same time, the integrated E&C business is expected to benefit from the continued ramp-up of activities across other geographies, particularly Central Asia and North Africa. We expect growth to accelerate further in the fourth quarter in the Sustainable Technology Solutions business unit, driven by backlog conversion, a favorable project mix, and the increasing contribution from Ballestra. So overall, we expect the full-year group revenues and EBITDA to be in the mid to upper end of our guidance range. Meanwhile, operating cash generation is anticipated to support an adjusted net cash position substantially in line with year-end 2025 levels. We enter the final part of the year with solid visibility and remain focused on delivering our full-year targets while maintaining commercial momentum to support further growth. We also continue to selectively pursue additional M&A and strategic agreements in line with our priorities. In particular, we are currently actively pursuing one opportunity in Europe, which we are confident could be announced before the end of the year. This concludes our presentation. And of course, we are now ready to take your questions. Operator, please go ahead.

[Operator Instructions] The first question comes from the line of Massimo Bonisoli from Equita.

One question on the trading environment. Could you give us some color on how you see the fourth quarter developing across the 2 divisions? In particular, how would you describe the current execution environment for E&C? And what kind of acceleration should we expect in NextChem with respect to the divisional guidance? The second question on STS and the pipeline. You have already reached EUR 8.9 billion over the 9 months, essentially achieving your yearly target of more than EUR 9 billion. Could you give us an indication of the size of the contracts currently targeted for award in the fourth quarter and the first quarter next year? And how should we think about potential order intake over the next 6 months?

Thank you, Massimo. Let me start with the first part of your first question. I would like to spend a few words about what we can expect in the fourth quarter as far as E&C business is concerned. And then I'll pass the floor to Fabio for his evaluation and his remarks on the expectations for the fourth quarter for STS. There is no major information to add to what we have already mentioned in our presentation with our press release. We have confirmed our guidance, the upper side of our guidance. It means that it is easily quantifiable what we are expecting to deliver in the fourth quarter. Of course, we are committed, as far as the projects which are ongoing are concerned, to do our best to reinforce additionally the progress of certain projects. In particular, we see the possibility to accelerate a little bit as far as our projects in Kazakhstan are concerned. There are all the conditions now which could make possible to progress even additionally compared to the planned contractual progress. As far as the Middle East is concerned, as you know, the Middle East projects based there are the major contributors to our production, namely our revenues. So since today, we have been able to manage all the challenges which the geopolitical situation is delivering, we expect to be able to be in a position to continue with the progress that we have been able to deliver in the second and the third quarter as well with the possibility to do a little bit better because us to say, as we have already mentioned, the third quarter, in particular, the months of August and September have expressed some additional challenges because the adverse climate conditions, which, of course, we are not expecting to face once again in the last quarter of the year. So for sure, we are well positioned not only to replicate the performance of the third quarter, but to increase, to grow additionally what we have delivered with the projects which are currently under execution. And even considering that, of course, the projects newly awarded are progressively delivering additional volumes of revenue. So for this reason, we are very confident that by the end of the year, we will deliver the upper side of the guidance. But now I pass the floor to Fabio. And then I will reply to your answer regarding the expected additional awards. Please, Fabio.

Thank you, Sandro. Yes, on STS, the question was on backlog conversion mix and increasing contribution from Ballestra. I would say that what is probably contributing most in the fourth quarter in terms of backlog will be the fertilizer business line. 2026 has been a very good year for, I would say, nitrogen fertilizers, driven by a couple of elements. The first one is that we got to the conclusion of the award of projects which we had been working on for a long time, like SAN 7 in Saudi Arabia, but it was also an acceleration of awards of fertilizer projects elsewhere in the Middle East. And I'm referring primarily to Fertil Pampa in Argentina and also to a couple of acquisitions we made in China. So probably, if I have to name the most relevant contribution of the fourth quarter will come for fertilizers, but also from other business lines. As far as Ballestra is concerned, don't forget that Ballestra's backlog is slightly different from what we have in NextChem. So it has a longer delivery time than the usual backlog of NextChem projects, and it contains some elements of the E&P business in the current backlog. So this is more or less the situation. Ballestra will clearly be a contributor in the fourth quarter, but probably the best contributor will be the fertilizer business. And clearly, we are confident we will be able to manage and achieve the results we have announced.

So, trying to complete the answer to your question, Massimo. Talking about order intake, I truly believe that all of you have appreciated what we have been able to deliver in the first 9 months of the year, a very successful period, commercially speaking. We have been able to secure EUR 9 billion, which represents, in particular in this challenging environment, an outstanding performance. Also, because we have been able to widen the operational area for our project and being successful in expanding our presence in Latin America, Argentina, Trinidad and Tobago then in other traditional countries but we were not there since a few years, for example, in Turkey. So, this has been the story of the last 9 months. Now we are at the end of October. What else is there until the end of the year? Well, considering the satisfactory commercial pipeline of EUR 61 billion, and considering that our commercial department, both the E&C business unit and the commercial department of NextChem, the STS business unit. Both of them are working on real prospects. But we do not expect to secure other projects of billions by the end of the year. We have some targets quite hot located in particular in Europe, middle projects from an EPC project standpoint. So you can imagine that I'm talking about something ranging between EUR 400 million, EUR 500 million, EUR 600 million equivalent. One of them, considering where we are now with the commercial discussions, I am confident that it will be possible to have secured this project by the end of the year. On top of it, of course, we are targeting those types of projects, detailed engineering FEED, the first step of the process for securing other giant projects in 2027. And I am talking about once again gas treatments, fertilizers, and ammonia projects; all of them are real targets on which we are already working hard. What we expect to have in the first part of 2027. Then I don't know. The final decision belongs to the client. So of course, we are not the master of their decision process. Based on what they have anticipated, I truly believe that it could be possible to have recognized and assigned one project, which we have mentioned in our presentation, for which we are presently going to deliver the detailed engineering, and it is due to be automatically converted into an EPC contract to the extent that, of course, the result of the FEED and the quantum of the investment will satisfy the expectation of the client. But we do not expect any particular surprise because we have already discussed; we have already delivered some portion of those activities. So for sure, in the first part of 2027, the traditional size of an EPC for a fertilizer or an ammonia project, exceeding $1 billion, could be awarded. And then in the second half of the year, there will be the conclusion of the commercial process for those other feed projects on which we are working so far, but it will not be possible for them to have the conclusion before summer 2027. So not possible in the first part of the year. And in the second half, we are talking about the super giant projects. And when I say super giants, we are talking about projects ranging between $8 billion and $12 billion each. And on top of that, there is the LNG market. LNG market is quite a new segment for our group, both for NextChem and for Tecnimont. But due to the successful award of the project that we are presently executing on behalf of Arch LNG in Louisiana, we are now delivering the FEED and all the activities to get the authorization from the U.S. federal authorities. This has launched our group into the small group of companies that are used to work in the LNG space. This has made it possible to have been awarded the FEED for the LNG; of course, we are doing our best in order to be in a position to have converted it into the EPC. And also, there are other prospects in the LNG space for which we have already received the invitation to participate in the tender. So it is a real recognition that our group, Maire, as a whole could be and will be one of the most critical players in the LNG space moving forward. So just to say that I am, of course, not relaxed, but I am really satisfied about what we have already achieved and what we can really deliver in 2027. I don't know if I have an answer to your question in this long answer, but I truly believe that I have provided you with all the necessary information, which provides the confidence and the comfort that the future can be served only in the best situations, better situations even compared to what we have already awarded.

The next question comes from the line of Kate O'Sullivan from Citi.

So firstly, in your prepared remarks, you highlighted several upcoming deliveries in the Middle East that could accelerate activity. How much visibility do you have on their timing, and how material could their contribution be to revenue and EBITDA? And more broadly on that one, how should we think about the impact of the Middle East situation on growth in 2027? And then secondly, one for Mariano, maybe. Could you help me bridge the softer operating cash flow this quarter, particularly some color around the higher cash tax and then also on the working capital?

Let me provide you with some additional information about what we are doing in the Middle East. I am convinced that, as far as Hail and Ghasha, which is the main contributor to the Middle East project, I have already provided some color about what we are doing. We have achieved 80% completion. We are progressing. We have already all the relevant materials on site, which is able to feed the progress of the incoming months. So far, so good. Of course, when you say what we can expect in the 2027, of course, 2027, even if detailed information will be provided only when we will communicate year-end results at our Capital Market Day, but I can anticipate, of course, it is quite easy to understand that the most significant portion of the activities expected in 2027 are already backed by projects which are in our current portfolio. So as far as Maire is concerned, we have no particular pressure, and of course, a lot will depend on how the present geopolitical situation will evolve moving forward. If the situation should remain as it is right now, we don't see any particular constraint to deliver the same progress or even accelerate a little bit compared to what we have delivered so far, based on the condition that we already have all the necessary materials at the site, and we have been able to mobilize all the resources, which are able to deliver even additional progress on a monthly basis. So we have already organized all the conditions to do better compared to what we have delivered so far, considering, I repeat once again, that we are not expecting to manage the same adverse climate conditions that we have been obliged to manage in August and September, reducing the activities during the day and just enhancing the activities during the night shift. Now we are in a position to maintain the traditional level of efficiency. And for this reason, we are even in a position to accelerate a little bit. And this is the basis that has confirmed the possibility of achieving the upper end of the guidance that we have targeted for 2026. So this is as far as the performance, in particular, affecting the Middle East project. I have concentrated a lot on the UAE, but of course, we have also other projects in the area. Qatar is almost complete. Other projects in the UAE are under commissioning. So it is not necessary to rely on materials or thousands of people. And then, in Saudi Arabia, one project has just started. Accordingly, the engineering activities are presently run in Milan or in Mumbai. So these activities are not affected by the Middle East region challenges. And while another one, which is the Amiral project, also this project has already benefited of the deliveries of materials in the previous month. So now everything is progressing in accordance with the contract. So for this reason, as I said before, so far, so good. And I repeat, if the situation doesn't get worse, we are well prepared to perform even better compared to the previous quarters.

Considering the trend of cash flow, it mainly depends on the projects executed in various parts of the world quarter-by-quarter. And so you could have different trends between one quarter and another, but it is mainly due to the activity we perform in the Middle East, in Kazakhstan, and in North Africa. Also, the tax depends on the payments we make in the specific area where we are operating, and they are mainly linked to the cash flow of the single part of the country we are paying.