Earnings call transcript: Italgas Q1 2025 sees net income rise, debt reduction

Italgas SpA reported a robust start to 2025, with significant improvements in net income and a reduction in debt. The company’s Q1 2025 adjusted revenues reached approximately €2,450 million, with EBITDA ranging from €1,800 to €1,850 million. With a current market capitalization of $96.47 million and an attractive dividend yield of 5.11%, Italgas continues to reward shareholders while making strides in operational efficiency and technological advancements, contributing to a positive outlook for the rest of the year. According to InvestingPro, the company has maintained an impressive track record of raising its dividend for 9 consecutive years.

Key Takeaways

• Net income increased by 12% year-over-year.
• Debt reduced by over €200 million in the first quarter.
• Acquisition of Dui Re Tegas completed, with a merger planned for July 2025.
• Significant progress in digital transformation and leak detection technology.
• Strategic focus on energy efficiency and regulatory adjustments.

Company Performance

Italgas demonstrated strong performance in Q1 2025, driven by a combination of increased revenues, improved operational efficiencies, and strategic acquisitions. The integration of Dui Re Tegas is expected to enhance its market position, while ongoing digital initiatives aim to elevate its technological capabilities. The company’s focus on energy efficiency and adapting to regulatory changes positions it well within the evolving energy infrastructure landscape.

Financial Highlights

• Revenue: €2,450 million, marking a significant increase from previous periods.
• EBITDA: Between €1,800 and €1,850 million.
• EBIT: Between €1,120 and €1,160 million.
• Net income rose by 12% year-over-year.
• Debt reduction: Over €200 million in Q1.
• Cost of debt: Approximately 1.7%.

Outlook & Guidance

Italgas expects the acquisition of Dui Re Tegas to be EPS accretive in 2025. The company anticipates net debt to fall below €11 billion by year-end, with a capital increase planned by June 30, 2025. A new strategic plan is set to be unveiled in October 2025, aligning with preparations for the upcoming regulatory cycle in 2026.

Executive Commentary

CEO Paolo Gallo emphasized Italgas’s leadership in the energy infrastructure sector, stating, "We have created the European champion, the largest in size and the most advanced in terms of technology." He also highlighted the expected positive impact of recent acquisitions on earnings, noting, "We expect the deal to be EPS accretive already in 2025."

Risks and Challenges

• Regulatory changes: Adjustments in WACC and deflator could impact financial performance.
• Integration risks: Merging Dui Re Tegas may present operational challenges.
• Market conditions: The end of the Super Bonus may affect energy efficiency market dynamics.
• Competitive pressures: Maintaining technological leadership requires continuous investment.

Q&A

During the earnings call, analysts inquired about the €200 million synergy target for 2029-2030, the disposal of 600,000 delivery points, and the integration of external service contracts. No immediate updates were provided on the Rome concession tender, highlighting ongoing strategic evaluations.

Italgas’s Q1 2025 performance underscores its commitment to growth and innovation, with strategic acquisitions and technological advancements paving the way for sustained success.

Full transcript - Italgas SpA (IG) Q1 2025:

Conference Operator, Chorus Call: Good afternoon. This is the Chorus Call conference operator. Welcome and thank you for joining the Ital Gas First Quarter twenty twenty five Results Conference Call. As a reminder, all participants are in a listen only mode. After the presentation, there will be an opportunity to ask questions.

At this time, I would like to turn the conference over to Ana Maria Scalia, Head of IR of Itau Gas. Please go ahead, Meta.

Ana Maria Scalia, Head of IR, Ital Gas: Hi. Good morning, good afternoon to everyone and thank you for joining us. I’m here with Paolo Gallo, our CEO and Gianfranco Amoroso, our CFO. We will address today the first quarter twenty twenty five results and any questions you might have at the end of the call. And I leave out now the floor to our CEO.

Just I invite you to read the disclaimer on page two of the presentation. So Mr. Galo?

Paolo Gallo, CEO, Ital Gas: Thank you, Ana Maria. Good afternoon to everyone. We are starting from the presentation from the status of the Duyere Itergas acquisition. As you know, because it’s been announced, we closed the deal on 04/01/2025. And I think the good thing is that we were able to close the deal ahead of schedule, because if you think about that we were able to get to closing just eleven months after we announced the starting of the negotiation with the shareholder of Douai and only six months after reaching the agreement on the for the acquisition of Didui, think it’s a very extremely competitive period.

In these six months, we have worked very hard in order to complete all the condition precedents among which the most important was the antitrust approval. And we after we obtain all those condition precedent, all those authorization, we were able to close. As I said several times, I think that has been an historical milestone for the group. It’s a deal that it’s positive will bring extraordinary value not only to Italgaz shareholders, but to all the industry itself. As you know, we have created the European champion, the largest in size and the most advanced in terms of technology that is capable to work actively on the energy transition.

I would like to thank everybody that has been working in these months in order to be successful in this deal. And I would like to welcome all our colleagues from the way Re Tegas that has joined us in since April 1. We are extremely excited about the future that we can build together. But now and now it’s already started on April 2, Work has already started and we have a very tight milestone that is July 1 when Dwei Retegas will merge with Ital Gasreti. And I think it’s the first and most important milestone in the coming months.

In order to reach this milestone, we are working really hard about reorganization at the corporate and operational level. And you can imagine at the IT system integration. That will let us reaching the first synergy, the ones that we have described in details during our strategic plan. I think they are very important. And the things that we are ahead of schedule, I think it’s a very good signal.

And we will talk about that when we will talk about the guidance. But let me also talk about the increased capital. We hope to complete it by the end of the first semester. And therefore, we are working also out in that direction to be able to complete that. As well, we have already started on all the activities that are linked to the antitrust remedies.

We are fully on schedule. I don’t know whether look about the decision of the antitrust. If you have looked, you have noticed that there is a very tight schedule in order to reach around October the completion of the activity. We are, as I said, fully on schedule. We have already appointed the monitoring trustee that was the first step that has been approved by the antitrust too.

So now we are working in order to as a second step to publish the invitation for anyone who is willing or is interested to buy the portion of the nectar, the redelivery point that we are going to sell under the remedies requested by the antitrust. But now let’s go let’s move to the numbers of the first quarter. Let me underline that this first quarter of twenty twenty five does not have I’m underlining this point, does not have any Duehrette gas contribution considering that the closing has been reached on April 1. So that is fully comparable with the first quarter of twenty twenty four. And here, it is listed the changes that we have recorded in the first quarter.

And despite the fact that the WACC has been significantly reduced from 6.5% of 2024 to 5.9% this year, result has been extremely positive as you can see. And it’s positive from all the area, from all the businesses, starting of course from gas distribution. I will speak in a moment why, grease, water and energy efficiency. You also need to consider that after a long time finally, there were some of the gaps in the regulation that happened in the past year have been closed with the latest two decision by the authority and that are incorporated in these numbers. Some of them are one time numbers and therefore are only incorporated into reported numbers and that’s the reason why you see the adjustment one.

Nevertheless, the net income at adjusted level increased by more than 12% despite higher financing cost and taxes confirming the goodness the good and the resilience of our growth trajectory. Another element that is extremely positive is the fact that the debt has been reduced by more than €200,000,000 in the first quarter benefiting from the solid cash flow from operation. Let’s move on the CapEx side. If you look at the CapEx side, the amount of CapEx that has been invested in the first quarter is slightly higher than the first quarter of twenty twenty four. It is we have reached €331,000,000 It shows a stable investment in the network and repurposing, which led to the installation of 140 kilometers of new pipes, more than 50% increase.

And of course, you will see a less spending at least in this quarter in digitalization area because the project in term of digital transformation of our asset has nearly been completed. We have seen some other CapEx increasing likely like the what we are spending in our headquarter in Torino about the refurbishment of the area. If we look at the environmental performances on the next page, you will see the energy consumption and the Scope one-two emission. Let’s start from the energy consumption, which was up by nearly 5% versus last year. The increase is mainly related to lower winter temperature that increased the amount of the gas that has been distributed during the first quarter in respect of the first quarter of twenty twenty four.

We with slightly higher specific consumption. We expect this trend to revert in the coming quarter as the temperature normalize. Electricity consumption was lower due to the higher use of out of use electricity. And if we focus on the vehicle consumption, there is a slight increase in the net energy consumption, mainly related for the Greek component due to the fact that there are new areas that have been added in term of mechanization and therefore we need some more kilometer in term of operation. If we look at emission, of course, whatever has been consumed more in term of energy is a normal reflection into the additional CO2 emitted.

And regarding the major increase that is relevant to gas leakages, there are two reasons why we see such increase. The first one that is the major driver is that 21% kilometers more have been surveyed. And that’s good because of course we will see over the year that the number of leakages will significantly be reduced. We have surveyed the area that in 2024 and 2023 were the area where we find out the major leaks and therefore we focus our attention on that. And the second reason why is that we are aligning ourselves very quickly to the new European methane emission regulation that is extremely strict.

Now let’s move to look at the total revenues. If we look at the total revenues, we have split the difference between last year and this year. As you can see, the reduction of the Italian WACC is significant, but has been compensated by what is the €26,000,000 Let me try to explain. We see also in the following slide some more explanation. If you remember in especially in 2022, ’twenty three and ’twenty four, we always discuss about the fact that the regulation has not only a time delay in recognizing the inflation level, but also there was a significant gap in the inflation in the real inflation in respect to the ones recognized to us.

And in fact, what happened is that the regulator reviewed the so called deflator, now it’s called reevaluation factor, aligning it to let me say to the more to the inflation that you can see in the market. And it reviewed the 2023 and 2024 numbers and that has represented for us an increase at the end of 2024 of the total RUB 1 hundred million 1 hundred and 50 million euros over the €9,100,000,000 of RUB. And because that review has been carried for 2023 and 2024, we have accounted the delta that is coming from the additional RAB in term of tariff. And that represent about €16,000,000 At the same time, the application of the X factor in 2025 has been such that the inflation applied to the OpEx is equal. So the two elements the sum of the two elements were negative, the X factor was positive inflation is equal to zero.

And then as you remember, there has been a long journey about the review of the decision that the regulator made back, if you remember in December 2019, about the OpEx level and the X factor level for the regulation period. Finally, after the decision of the Considio de Stato, Areira finally reviewed the decision they made at that time and that represent about €4,000,000 of OpEx recovery. I should not forget the fact that in the quarter our RAP increased, thanks to the investment we made last year either in Greece and in Italy and therefore there is also significant contribution of the RAP increase. The other elements represent the water contribution coming from Aqua Campania. I should remind you that in the first quarter twenty twenty four, Aqua Campania was only consolidated in February 1, so two months instead of three.

So there is a difference of one month. And then I’m very happy to say that the energy efficiency is growing again as we have forecasted 2024 has been a tough year for the energy efficiency due to the fact that the super bonus completely disappeared. And now we are rebuilding the business and you can see again a growing in not only in revenues, but also in the margin. If we move to the next slide, you have some more details about the two resolution adopted by the regulator. The one the so called Resolution 87 is the one that goes back to 2019 when in December, Areira issued the new level of OpEx and the new level of X factor that we challenge in the court and we win either at the tribunal administrative of Tara and at the consolidated status.

So at the finally they review it. And then in that case, we have two elements. What has been recognized to us for the past 2020, ’20 ’20 ’4 that has been considered in the reported numbers, but not in the adjusted number. So we consider them as a special items. And of course, what has been considered for 2024 that I mentioned you before that are equal to €4,000,000 The second resolution is the one that I discussed already is the reevaluation criteria for the ramp.

As I said, it is more consistent with the real inflation that we experienced and we will experience for the future and it recovers 2023 and 2024 RAB and that has been accounted as I said before. Let’s move and then I will leave the floor to Gianfranco looking at the OpEx side. As you can see on a like for like basis, we were able to reduce our cost by 1% in respect of the previous year. And the addition is relevant to Acua Campana, the famous months that I mentioned you before in term of revenues and the additional cost in the energy efficiency that are driven by the additional revenues that we recorded in the first quarter. Gianfranco, now it’s

Gianfranco Amoroso, CFO, Ital Gas: your turn. Thank you, Paolo. Now we will comment the evolution of the EBITDA and the EBITDA. As far as the EBITDA, the growth has been of about 6% compared to first quarter of last year. The main contributor to this growth has been, as in the past, the cash distribution with a positive contribution of €15,100,000 Then we have the contribution provided by the water sector and geocide, this €4,500,000 of which €2,500,000 are due to the additional month of consolidation of Aqua Campania as Paolo explained before compared to last year.

If we look at the absolute value of $345,000,000 end of March 20 20 5, the composition of that figures is that the main portion is for the Italian gas distribution with about 300,000,000 of EBITDA or about 87% of the total. The remaining is split between Aenon with around €34,000,000 and the Water and Geoside for about €11,000,000 The main difference that you can appreciate between the growth of the EBITDA and the EBIT, where EBIT has a growth of 17% compared to last year, is mainly due to the depreciation, as you can see from the chart. In particular, in the quarter, we have a positive contribution, quite unusual for depreciation. That is due to the fact that the concession of Rome, as you know, has expired last November. And so in this number, this year, you do not have anymore the depreciation linked to this concession.

The value of this discontinuation of the depreciation is about €21,000,000 And as you can see, since the value is 13,000,000 positive, it means that there is a difference of around €8,000,000 due to the increase in this case of the depreciation linked to the carryover of the CapEx executing during the previous quarters. So moving to the following page, talking about net profit adjusted, the growth is double digit of about 13% compared to last year first quarter. On this, I will mainly focus on the net evolution of the net financial expenses and of the tax rate. For the financial charges, we have an increase of €7,500,000 in terms of cost. That is mainly due to two different elements, the carryover effect of the instruments that we issued in 2024 in February and in September.

So we have basically one month more for the instrument on February and three months for the instrument of September. And then for and this will is about €5,000,000 Then we have for 1,200,000 the new the impact of the new bond that we have issued at the March, the dual tranche that, as I said, is for one month and accounts for €1,200,000 As far as you have seen in the press release, there is also a bridge loan that has been drawn, but has been drawn the last day of the quarter in light of the closing of the April 1. So that we do not have any P and L impact in these figures of 7.5% that I’m commenting. For the net income coming from equity investment, there is a number that is negative for €1,300,000 It is due to the quarterly results of Sicilia and Aqualina mainly. Interesting comment about the tax rate is coming back to a normal level of 27.4 which is, let’s say, compared to the 27.8% of 2024, not considering the impact of the Patent Box.

Otherwise, the tax rate would have been has been the actual tax rate has been 24.8%, so in line with the tax rate of the full year 2024. If we move to the following Slide 12, I will skip it because it’s basically a recap of the trends that we that Paolo and myself, we have already commented. More interesting is the comparison with Slide 13 when where you have the impact of the adjustment. The first at the level of the revenues is a €54,400,000 adjustment linked to the resolution to the impact of the Resolution 87 concerning the allowed OpEx and the amendment recognized by the regulator for the portion that covers the period 2020 until 2024. Then going down after the EBIT, there is the adjustment of €1,300,000 that is related to the a portion of the impact of the portion of the option fees paid with the bridge loan and the Resonore bridge loan that I commented before that has been drawn the last day of the quarter linked to the acquisition of Dueretigasse.

The tax impact of the items above accounts for approximately €50,000,000 and then the impact correlated to the minorities is 2,100,000 The impact correlated to the adjustment of the €54,400,000 basically. If we move to the cash flow, this is the cash flow for the quarter can be considered as a very positive evolution. In particular, we the operational cash flow of €412,000,000 allowed us to reduce the indebtedness of more than €200,000,000 in the quarter, which is a lever that can be considered very satisfactory. In particular, cash flow has benefited of the positive performance at the level of net income that we have already commented. And also the working capital has had the positive impact of, let’s say, a good evolution in terms of volume of gas sold.

So in addition to the usual seasonality, you know that in this quarter, normally, in this year, there is the higher percentage of cash flow generated from the in regards to distribution, coupled with a favorable evolution of the volumes, allowed us to exceed €100,000,000 of positive contribution of the working capital. This is, of course, not structurally for the whole year, but is a positive outcome if you compare this quarter to the quarters of the previous years. The CapEx operational cash flow of more than €400,000,000 has fully covered of course the net CapEx of $226,000,000 And then with some minor adjustments of around 20,000,000 not with non cash items, you arrive to the reduction of net debt of 200,000,000 more than €200,000,000 The net debt, as you can see in the following page, Page 15, reached in the quarter €6,560,000,000 including IFRS 16 or 6,470,000,000.00 excluding IFRS 16. The financial structure remain, as you can see, very consistent with the past. Also the last debt instrument issued in the quarter are consistent with the strategy to have more than 80% approximately almost 90% of debt at fixed rate in order to allow us to give visibility to our cost of debt going forward.

Of course, condition in the refinancing exercise follow the condition of the evolution of the rates of the market. So the cost of debt in the quarter is now around 1.7%. Just to remind also the new bond issued in at the March with a dual tranche for five year and nine year. The five year has a coupon of 2.875%, while at nine year has a coupon of 3.5%. This new debt notwithstanding the as I said, the market the evolution of the market rates, allowed us to keep the cost of debt in the region of the 1.7% that I previously commented.

Now we leave again the floor to Paolo for the final remarks and the guidance.

Paolo Gallo, CEO, Ital Gas: Thanks, Gianfranco. Now I would like just to show you the guidance. As we said during the previous conference call when we presented the numbers for 2024, we promised that the guidance would have been given at the first quarter result and here we are. Let me first of all clarify that the guidance includes the contribution of Due Erette Gas for nine months, so from April to December and assumes the completion of the antitrust disposal process in 2025, mainly in October 2025, so fully in line with the schedule requested by the antitrust, but we expect that the related impacts, the related numbers of the dismissal will materialize in early in January, February maximum 2026. I think it is also important to underline the fact that we expect the deal to be EPS accretive into already in 2025.

We have made this calculation assuming the application of scenario IAS 33 accounting principle and is calculating versus the scenario without Duehrytegas, so Italians standalone. If we look at the numbers, the adjusted revenues, so adjusted revenues means that we do not consider the reimbursement coming from the regulator for the years twenty twenty, twenty twenty four related to review of the OpEx. So those numbers are not included into the total revenues are approximately €2,450,000,000 The EBITDA will range between 1,800,000,000.0 and €1,850,000,000 EBIT the range of the EBIT will be between 1,120,000,000.00 and €1,160,000,000 and technical investments are in the range of 1,200,000,000.0 Finally, we expect that the net debt will be below €11,000,000,000 at the end of the year. As I said, considering no impact considering the fact that the materialization of the dismissal following the antitrust request will see an impact only at the beginning of twenty twenty six. Thank you for listening and we are open to questions you may have to any questions you may have.

Conference Operator, Chorus Call: This is the Chorus Call conference operator. We will now begin the question and answer session. The first question is from Aleksandr Asorba from Equita. Please go ahead. Hi, good afternoon.

Aleksandr Asorba, Analyst, Equita: Thank you for taking my questions. A couple of questions on my end. Just maybe a follow-up on the guidance you just presented. So maybe can you provide us with some more color or details on the let’s say on the movement parts and components? So what is the exact contribution of Adui, Re Tegasto expecting for the nine months of 2025 and also maybe the other main businesses?

And the second one linked to the first one, you mentioned that you of course are already starting to work together with Eurotegas in order to deliver efficiencies and synergies. So what level if any of synergies do you already incorporate in the 2025 guidance? Thank you.

Paolo Gallo, CEO, Ital Gas: Well, me start from the second question. As I said, made a fairly deep analysis about the evolution of the year. And as I said at the beginning, we are expecting the first synergies to happen. We are in the range, let’s say, about €10,000,000 taking more or less. So I give you a round number.

And those synergies are ahead of what we were expecting. The reason being is that the schedule we are ahead of schedule. The fact that starting from July 1, there will be only one company is the merging between Natal Gas Reiti and Dui Eretegas. And therefore, is going to be, let me say, quicker to generate the synergy. The contribution of Dui Air Ategas, we don’t normally give such details during the guidance.

You can, let me say, you can work a little bit on our quarter and then you can eventually evaluate by yourself, which is the contribution that of course is positive. The fact that I tell you that the deal is accretive already in 2025 is a signal that the contribution of the Urierete gas, let me say that the sum let me say differently, that the sum of twelve months of oil gas plus the 9 months of Nuehrette gas is not just the matter of sum, it’s a little bit more than the sum.

Conference Operator, Chorus Call: Okay. Thank you. Very clear.

Ana Maria Scalia, Head of IR, Ital Gas: Next question please.

Conference Operator, Chorus Call: The next question is from Yves Fouares from Mediobanca. Please go ahead.

Yves Fouares, Analyst, Mediobanca: Hi, everyone. Three questions from my side. The first one is on the changes after the your latest business plan presentation in October. So there has been important regulatory papers including a new WACA, new deflator, the retroactive revision of unitary OpEx, antitrust restriction on disposal and several things. So it’s much more a question that has to do with a directional answer much more than a numerical answer.

But how these changes compare with your latest expectation that you’re guiding for a net income CAGR of 13% EPS CAGR of 10%? So you can or could you elaborate on the different moving pieces and the impact versus your previous expectations or mostly versus your previous expectations that would be helpful? Then second question is on the synergies. I’m looking at slide number nine and looking at the like for like efficiencies that continues to go down. So if you can elaborate and help us to understand from where these efficiencies are coming from?

I’m particularly interested in the process of extracting synergies from the operation of the assets in Greece. And yes, the details on what do you see that number of like for like efficiencies maybe by the year end? And the third question is on the efficiency energy business. Has caused my attention the fact that this activity is growing again. So if you can please elaborate on the reason behind this Atera the end of the incentives.

Thank you.

Paolo Gallo, CEO, Ital Gas: Okay. Regarding the first question, you’re right. There has been some changes in respect of the assumption we made in the strategic plan and are relevant of course to 2025. As you know, we assumed a certain level of WACC in the strategic plan that was declared. Unfortunately, that WACC final approved by the regulator is lower by 20 basis points.

So in the elaboration of the guidance, we have considered that. As well as we have considered the review of the RAB, now it’s called reevaluation factor, let’s call it in the old way deflator. That in that case is positive is a positive contribution. We have considered the OpEx review, not the recognition of the we call special items from 2020 to 2024. So let me say that that is the basis that have been considered to arrive to the guidance.

If we look, let me say, at the future, I will tell you we will tell you something more in October when we will present the new strategic plan. And that will be also useful because in the meantime, you remember that in 2026, there will be a new regulatory cycle, starting new regulatory cycle. We will have, let me say, the first elements coming from probably from the first consultation document that the regulator we should we imagine, we expect before summertime. So we to tell you how the new strategic plan will look like in comparison with the one that we presented in October, then it’s hard to say now. We will tell you more in details in October.

Regarding the synergies, you are always surprised every quarter about our synergy. After 33 quarter of surprise, you should be okay. You should be surprised if we are not making the synergies anymore. The synergy, I’m talking about the efficiency of Ital Gas and not the synergies. Synergies and other math.

How we can we are able to achieve those synergies as I told you many times is not one single subject or two subjects or three subjects, three topics, four topics. That is not it is dozen of topics involved by the digital transformation that are able to reduce maybe with small numbers. But when you have dozen of topics that reduce the cost even by a small amount of money, if you sum all these small amount of money you make a number that still is quite important. Regarding Greece, Greece is moving quite fast toward if you go back about two strategic plan, not last year, but the previous year, You remember there was an ambition about Greece to bring the level of efficiency of Greece closer or align with what we have in Italy. We are exactly on that path.

So if you want to go back to that curve that I remember was in orange and you take back you look back at that curve, you can put us on that curve exactly. So we are eating toward being Greece as efficient as our gas distribution. Finally, on the energy efficiency, that is something that we told you last year. Last year, we told you don’t worry about the energy efficiency business. 2024 would be very bad for them because we don’t have the super bonus anymore.

But 2024 will be a transitional year in the sense that we will work hard to restart activity in three main area. Industries, so providing energy efficiency services to the industry and we did it providing energy efficiency services to the public administration. We made some offer, let’s see how it will go on. And the third area that in fact is growing is providing energy efficiency services to the large condominium. So we restarted also in that direction.

So we are rebuilding a very stable and very solid business that will not last a couple of years like the Superbonus, but will last for longer. And the good thing is that the energy efficiency has recorded an increase in revenues, but even more important has recorded an increase of EBITDA margin. Now we are in the range of 14%. That is going close to what I always said the energy efficiency should cover businesses that will give us an EBITDA margin between 1618%. So we are close to that.

And that is a significant milestone. That is exactly based following the plan that we declared last year and we are following very closely. I would say slightly better.

Yves Fouares, Analyst, Mediobanca: Interesting. Thank you.

Ana Maria Scalia, Head of IR, Ital Gas: Next question please.

Conference Operator, Chorus Call: The next question is from Francisco Saba from Banca across. Please go ahead.

Paolo Gallo, CEO, Ital Gas: Good afternoon. Congratulations for your results. Just a few questions on my side. The first one is, can we assume as regards to RERA’s resolutions, if we can assume a similar impact in Q2 once two year degas is included in your numbers? That’s the first one.

The second one, if there is any update on the Rome concession tender that you can share with us? And the last one, what can we assume in terms of net working capital impact for the whole twenty twenty five? Thank you. Regarding the first one, I think it’s slightly, let me say, tricky the two resolution and the way you calculate. Let me see that in this way.

Let’s start from the OpEx that is the easiest one. What we have accounted, I told you about 4,000,000 Additionally, in the first quarter, it will be it’s about if you multiply by four, you get the full year impact. Regarding, of course, Ital Gas only, not to Irette Gas. Regarding, let me say, the impact of the reevaluation of the RAB is slightly more difficult. Let me say that in this way.

I’m trying to explain to let you understand better, so you can make your own calculation and understanding the true impact of that. As I told you, at the end of twenty twenty four, our the adjustment let me say on the RAB was €150,000,000 So that is the first point. What happened in the comparison of 2024? In 2024, we had two moment in which we had a different deflator rate. In the first quarter, the deflator rate was 3.8%.

In the second quarter, the deflator rate for year 02/2004 was increased to 55.3%. And now you compare it to 6.1%, so it’s 6.2%. What does it mean that? That the delta that I told you regarding the first quarter is let me say is going to be bigger than the delta that we will record in the second quarter. The reason is because we compare 6.2 to 3.8, while in the second quarter we compare 5.3 to 6.2.

If you look at the overall year, you need to compare 5.2 to sorry, 6.2% sorry, there are too many numbers, point 2% to 5.3%. Because last year in the second quarter, of course, we have adjusted to the highest number that was introduced later by the regulator. So the delta in term of RAB adjustment is, if you look at the overall year regarding Ital Gas is 6.2 against the 5.3. If you want to have the numbers for Druyere de Gas, we can tell you that the increase of RAB for Druyere de Gas same way at the end of the year of 2024 has been €85,000,000 I think there is still regarding tenders, Rome or general? Okay.

You were talking about the Rome tenders. So in that case, I will pass to the expert, the floor to expert that is Gianfranco Moroz.

Gianfranco Amoroso, CFO, Ital Gas: So basically, no news. So I will give you a recap of the situation where we stand. So concession expired in November. We have a receivable in our balance sheet of slightly less than €300,000,000 That is due was due and is still due because of the concession expired. The management of the concession is ongoing as usual.

So the services provided as before and also the remuneration in the tariff is exactly the same. In our P and L, the only difference are the depreciation, but I commented in the EBIT evolution. And if you want, say, to have a rough figure for the whole year is around €70,000,000 70 million 70 5 million euros And for as regard to the tender, no news on that. We are still waiting that the process part. So the preliminary phase of data collection are still to be started and completed.

So there is no visibility on the timing of future tender for the concession. Second question third question was for the net working capital. As I said, the net working capital for this quarter is positive as always in the first quarter with a boost given by the volumes. In this figure, there is also a receivable linked to the adjustment of €54,000,000 that we expect to be cashed within the next month. So this will be something that will you will find also structurally at the end of the year.

So overall, I expect a positive contribution for the working capital year end also considering this the cash in of this component within, let’s say, the next month.

Paolo Gallo, CEO, Ital Gas: Thank you.

Ana Maria Scalia, Head of IR, Ital Gas: Next question, please.

Conference Operator, Chorus Call: The next question is from Bartek Kubicki from Bernstein. Please go ahead.

Francisco Saba, Analyst, Banca across: Hello and good afternoon. Thanks for taking my questions. A few issues to discuss please. First on the disposal of $600,000 per delivery point. I just wonder what would be the equivalent wrap or veer value of those assets?

And consequently whether this wrap or veer value could be considered floor in terms of valuation? And also if you can maybe elaborate a little bit on the potential appetite on those assets? Second one on cost synergies with Tuaretegas. I think Tuarete Gas has a lot of external services costs. So I just wonder and looking at your history, you’ve been very good in cutting on the external services costs.

But I just wonder how easy you think it will be with Tuarete Gas to terminate existing contracts? And how long it will take actually to terminate them and then get the efficiencies on the external services contracts? And the last technical one related to the Rome concession. Can we actually expect in the next couple of years any expiry of any other concession? And then what possibly a positive impact on lower D and A as well?

Or it only applies to Rome? I don’t know. Just asking the Thank you very much.

Paolo Gallo, CEO, Ital Gas: Regarding the first question, we cannot tell you any more than 600,000 to be honest it’s 600,000 and 600 and 6 thousand if I remember well. Delivery point to be dismissal. Everything else appetite, which is going to be the value at which we are going to sell it, which is going to be the premium of RAB. We have expectation, of course, we cannot share it with you, with anyone. There will be a public and transparent process as requested by the regulator.

So you will hear in the next, let me say, conference call, think about like it’s a journey. You will follow the journey. We will keep you updated as long as this information will become public. But I’m not going to disclose anything on that. It will be against the rules set by the antitrust authority.

Good question on the second You’re right. Dueretigases many of the services are provided by a third party. The first one that we have already attacked is the leakage research. As you know, they have started to adopt our Picaro technology. We’ve limited the impact because I think they have research last year like 15,000 or something like that about in terms of kilometers.

What we have done, you’re right, we exactly accelerated for example, this is a very good example in which we decided to order new machinecars to significantly increase the number of kilometers inspected already this year. And instead of getting services from third party, we expect very soon that everything will be done by internal personnel either with the gas or with also the support of ItalGas Rete. That is one of very good example where we are going to bring back this activity and there will be of course synergies that will be will generate it. When they are going to happen? Let me say that we will see those kind of synergies probably end of this year, most probably beginning of twenty twenty six, because there will be taking the example of Picaro.

We have we need time. We have already started, but we need time to have the training of the new personnel not to drive, but to drive and able to read all the signal that are coming from the system and then to intervene immediately to fix any leakage they can find eventually find on their network. In the meantime, there will be an overlap between third party services and our activities. So I expect that year end January, so beginning of twenty twenty six, we will start seeing synergies from bringing back services that were provided by a third party. On the Roam concession?

Gianfranco Amoroso, CFO, Ital Gas: Yes. If I understand correctly, the question is if the accounting situation and positive impact of Roam is can be replicated in other tenders at the moment since almost all the tenders are expired, almost all the concessions. I would answer that the situation of Rome is very specific because you have you had the time of the concession in 2012 already a very well defined exit value of €300,000,000 And so the accounting principle allow you to depreciate in accelerated way the difference between the RAB and the final value. In the other situation, normal situation, you have the RAB, you have the beer, but you at the end of the concession, you have to determine the value of your assets. So you do not have this problem.

Problem of opportunity depends on the point of view, of course.

Paolo Gallo, CEO, Ital Gas: We don’t have any other situation. That is a short term answer.

Francisco Saba, Analyst, Banca across: Thank you very

Paolo Gallo, CEO, Ital Gas: Next question

Ana Maria Scalia, Head of IR, Ital Gas: please.

Conference Operator, Chorus Call: The next question is from Alberto D’Antonio from BNP Exane. Please go ahead.

Francisco Saba, Analyst, Banca across: Hi. Thank you so much for taking my questions. My first question will be coming back to the synergies. Is it the €200,000,000 target in synergies and cost efficiencies that you have until the end of twenty twenty Or with further analysis, do you have more visibility?

And if you could give us maybe some kind of time line on when do you expect these synergies to arise? The second one will be regarding your comment that you made on the right issue. Could you repeat when is the expectation in which will you raise the capital? Is it the second quarter or the second half of twenty twenty five? And then maybe on the RAVEN at the end of twenty twenty four, considering the impact of the new deflator, your annual report is for Italy Nine Point One Billion Euros Could you update this figure for the latest update of the Decatur?

And maybe the last one regarding the water business. And if you could provide some guidance and what’s your expectations in terms of the contribution for 2025? And if you have any visibility on the time line for the full consolidation of Sicily Aqua and Aqualatina? Thank you so much.

Paolo Gallo, CEO, Ital Gas: No. Regarding the first question, we have estimated around €200,000,000 of synergies in twenty twenty nine two thousand and thirty. We as of today, we confirm that. So there is no change. Of course, we are going to update these numbers by the new strategic plan that we are going to present in October.

As of today, if you remember there were three blocks. The first one was, let’s say, the traditional when you have emerging the most traditional synergy that you expect were in the range of €40,000,000 then we have another €80,000,000 coming from the digitization of the processes and of the network of Gas. Then we have another €80,000,000 that was the application of artificial intelligence not only on Duerette Gas, but also on Ital Gas itself on all the group. Those were the three pillars that we described. We are when I mentioned to you the €10,000,000 that we were talking about $225,000,000 that represent mainly the first pillar.

So the very traditional one that we are going to achieve in the second semester of twenty twenty five, thanks to the merging of the two company. Very quick answer on the increased capital. We expect to complete by 06/30/2025. So by the end of the first semester that is what we expect. We are working on that direction and hopefully we are able to do it.

Regarding the RAB at the end of twenty twenty four, as I said, it was you’re correct, this was $9,100,000,000 the gas RAB. You should increase that by 150,000,000 due to the adjustment of the deflator. On the water business, Aqualatina we cannot consolidate. We are 49,000,000 so we will never consolidate Aqualatina. Regarding Siciliaque, have not as of today, we are working very well with Regeneron Siciliana.

Let’s see when we are going to plan to consolidate it. Nevertheless, the contribution is not significant as you can imagine as well as the total water contribution, especially you have the contribution of the water in the first quarter. Even if you multiply by four, then the contribution will decrease because in the next nine months there will be a significant contribution coming from DuiRetelgas.

Ana Maria Scalia, Head of IR, Ital Gas: Next question?

Conference Operator, Chorus Call: Management, there are no more questions registered at this time.

Ana Maria Scalia, Head of IR, Ital Gas: So thank you everyone for attending and the IR team is available in case you need further follow ups.

Conference Operator, Chorus Call: Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones.

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