Earnings call transcript: Prismean Q1 2025 shows strong transmission growth

Prismean’s Q1 2025 earnings call revealed a solid financial performance, driven by significant growth in its transmission segment and strategic operational improvements. The company reported a revenue of €4.8 billion and a net income of €150 million. According to InvestingPro data, Prismean maintains strong profitability with a 36.2% gross margin and has demonstrated consistent revenue growth with a 5-year CAGR of 8%. The company’s current market capitalization stands at €17.3 billion, with analysts maintaining a bullish consensus. The transmission segment experienced a 60% organic growth, contributing to an improved EBITDA margin. Free cash flow over the last 12 months reached €1 billion, while net debt stood between €4.8 and €4.9 billion. InvestingPro analysis reveals the company’s strong financial health with an Altman Z-Score of 4.97, indicating robust financial stability. The company has maintained dividend payments for 18 consecutive years, with a current yield of 1.58% and impressive dividend growth of 33.3% over the last twelve months.

Key Takeaways

• Transmission segment achieved 60% organic growth, boosting overall performance.
• EBITDA margin in transmission improved from 13% to 16.9%.
• Free cash flow for the last 12 months was €1 billion, indicating strong liquidity.
• The company is preparing for the Channel acquisition in June.
• Prismean is well-positioned in the high voltage cable market with a strong backlog.

Company Performance

Prismean demonstrated robust performance in Q1 2025, with revenue reaching €4.8 billion and net income at €150 million. The company’s strategic focus on its transmission segment paid off, as it saw a significant 60% organic growth. This growth was complemented by a 16.9% EBITDA margin in the segment, up from 13% previously. The company’s operational efficiency and market leadership in pricing have positioned it favorably in the competitive landscape.

Financial Highlights

• Revenue: €4.8 billion
• EBITDA: €527 million (13.1% margin at standard metal prices)
• Net Income: €150 million
• Free Cash Flow: €1 billion (last 12 months)
• Net Debt: €4.8-4.9 billion

Outlook & Guidance

Prismean’s full-year EBITDA guidance is set at €2.3 billion (midpoint), with expectations of continued organic growth in the Power Grids segment in Q2 and Q3. The company is targeting a 17%+ EBITDA margin in transmission and anticipates improved margins in its Industrial Construction segment.

Executive Commentary

CEO Massimo Batayini expressed satisfaction with the transmission segment’s performance, noting, "We are super satisfied by the performance of transmission." He also highlighted the restoration of performance levels in March and April, stating, "March and April has restored the level of 15%." CFO Francesco assured investors about shareholder value, saying, "We will certainly minimize any dilution for the shareholders."

Risks and Challenges

• Potential U.S. tariffs could impact international operations.
• Metal price volatility may affect financial performance.
• Integration of acquisitions, such as Ankur Wire, poses operational challenges.
• Varied demand across European markets could influence revenue stability.
• Macroeconomic pressures may affect overall market conditions.

Q&A

During the earnings call, analysts inquired about the impact of potential U.S. tariffs and the company’s strategies to mitigate these effects. Prismean detailed its transmission project pipeline and explained margin improvements in the electrification segment, highlighting the importance of its strategic initiatives in maintaining competitive advantages.

Full transcript - Prysmian SpA (PRY) Q1 2025:

Conference Operator: Good day, and thank you for standing by. Welcome to the Prismean Q1 twenty twenty five Integrated Results Conference Call. At this time, all participants are in a listen only mode. After the speakers’ presentation, there will be a question and answer session. Please be advised that today’s conference is being recorded.

I would now like to hand the conference over to your speaker today, Massimo Bataini, CEO. Please go ahead.

Massimo Batayini, CEO, Prismean: Morning. Good morning, and welcome, everyone, to the earnings calls of quarter one twenty five. We are really off for a great start in 2025 with an EBITDA that hit €527,000,000 EBITDA, million euros well ahead of last year, even if you consider the €95,000,000 extra per limit due to the Ankurwar consolidation in quarter one twenty five. The EBITDA margin, which you see at 13.1% is the reported according to the standard metal prices. So that those are the metal prices based on the average of metal, copper and aluminum and lead prices in the ten years preceding 2019, which you know very well because they are normally reporting the appendix of the analyst call.

The organic growth was fantastic, 5% EBITDA, certainly driven by transmission, but also supported by stability in I and C, in Power Grid, and growth in digital solution. Free cash flow also outstanding at €1,000,000,000 for the last twelve months. ESG performance in line with expectation, minus 37% DISCO one and two reduction versus the baseline. I remind you that our target for 2025 is to achieve at least 38%, so we’re well on track to achieve it. Net zero is confirmed accelerated by the February.

Revenue linked to solutions sustainable is at IS forty three, and we have a significant improvement in the recycled content of copper mainly recycled content of material with this 19% trend of basis point up on the average over last year. Thanks to a significant availability of copper waste in our U. S. Perimeter, which anchor wire took advantage of. Moving to transmission, I mean, all KPIs are super great and super satisfactory.

The organic growth, in particular, is 60%. Never been that high. It is certainly driven by some extra activity, not necessarily coming from the extra capacity. We add only additional capacity in terms of one installation method, Mona Lisa, that joined our fleets at the beginning of this year. But as far as manufacturing concern, we are more or less the same as last year.

The rate capacity improvement will happen in the in certain part of this 2025. EBITDA wise, there is a significant surge from 60,000,000 to 24. EBITDA margin from 13 to 16.9. Talking about current metal prices, you see the margin underneath the bar chart. We are at the same of 16.6%, which is already itself ahead of what we committed to achieving that in 2025.

’16 point ’9 is sustainable? Yes. This is super sustainable. We we will end up at the end of this year with a margin that’s slightly ahead of the 17 plus for the full year. The important reason for the EBITDA increase of CHF 60,000,000 is on the one hand, we really had this quarter an impeccable execution during in during the installation and manufacturing activity.

We benefited from projects with better margin than last year. Last year, on the contrary, we had some cost overruns that hit particularly badly quarter one twenty twenty four. Sequentially, you see despite this is not supposed to be the stronger quarter in the transmission space, quarter one, twenty five, sequentially, we’re also ahead both in absolute EBITDA and the margin terms ahead of quarter four twenty twenty four. Backlog remains pretty high, 17,000,000,000. We count on some additions that we should save this year coming from a EAP offering agreement and a national grid.

But in quarter two, quarter ’3, we’ll see what will happen in this regard. I’ve agreed that we are pretty flattish. A slight decline in organic growth more related to the tough compensation with quarter one last year. We also had to account for some, I mean, bad weather impacts in The famous US footprint in quarter one, which also affected the IEC business. And maybe some wait and see situation within The US space given the current tariff and and and dynamic happening in the markets.

But EBITDA wise, in line with the quarter one twenty four. In terms of EBITDA margin, I think here’s a way it is where you can best appreciate the more effective way to read the profitability. If you look inside the bar chart, you see an improvement in EBITDA margin at standard metal prices from 14.8 quarter one 20 four to 15.2. If you look at on the other hand at the current metal prices, they will then move from 13.5 to 13.3. So this is the effect of dilution in quarter one twenty five due to the incremental value of metal in our revenue.

So that’s why the standard margins are the best to appreciate the real inherent and genuine profitability of the business. In sequentially, we confirm profitability stability 15.4%, fifteen point two %, and also stability in EBITDA in EBITDA absolute value. Industrial construction, also here pretty flattish in terms of organic growth. The comparison year over year is a bit difficult to appreciate because quarter one twenty four is without was without ANCO, while the 173,000,000 of quarter one twenty five are with ANCO. But if you normalize AMCO and you consider pro form a quarter one twenty four, you should rate that 01/2014 as 208.

So we confirm that we are 35,000,000 below quarter one twenty four pro form a. All of those 35,000,000 belong to January and February US. March situation is completely different. The EBITDA margin has significantly improved to the point that maybe we can also anticipate or share with you what April look like. April margin are well on track back at the level of 15% plus, which what we used to have in quarter three last year, the first quarter of the acquisition.

So US situation seems to be seems to have been resolved. It was a one off impact due to the bad weather, due to the surge in metal prices, due to the weakness of the market and some pricing behavior of different competitors. March has restored the previous trend in April as such. Probably one of the best months ever in the AlcoWire perimeter IUC North America. Specialties, sequentially we show a significant improvement at SEK59 million quarter 4 20 4 turning into SEK74 million.

EBITDA margin as standard metal price growing a couple of points. Year on year, we are still down on the strong quarter one that we had last year, and we have also a deep comparison in quarter two where quarter two last year was pretty strong. But the 74,000,000 of quarter one twenty five is is paving the way for strong growth in quarter two and the coming quarters. Digital solution, finally, a significant improvement. Digital solution organic growth posted 3.4% year over year, 2,000,000 turning to 42.

EBITDA margin significantly improved from 10.8 to 13.2. We are still not benefit from pricing recovery in the market or we have some mild pricing recovery in our backlog. But in the order intake of this month or this week, sir, we see significant high level of prices, which we will turn into revenue and EBITDA in quarter two, quarter ’3, and onwards. The market is super strong in United States. So so demanding that we we we struggling with our local capacity by complementing our local output with the inputs imports from different places to maintain our share of wallet with with the American customers and follow the demand growth in the market.

As said before, we have significant improvement in the circular economy KPIs. Climate ambition on track to deliver the 38% target for 2025, and the social ambition is well positioned in line with our goals of ’25 and the capital market area goals. Let me move to Francesco for the financial insight.

Francesco, CFO, Prismean: Thank you, Massimo, and good morning to everybody. The usual recap of our profit and loss. Revenues reached almost EUR 4,800,000,000.0, of course, including the change of perimeter coming from the consolidation of Ankur, which was not there in Q1 twenty twenty four. Organic growth, pretty positive, very positive, would say, at 5%, certainly driven by transmission, but with also good solid stability in I and C and power grid and a growth actually in digital solution, as Massimo said, very strong in North America. Good news also from the start of the year on the EBITDA, the adjusted EBITDA, dollars $527,000,000.

You appreciate, as Massimo commented, the margin expansion. If you look at the percentage on revenues at standard metal prices from 12.4% to 13.1%. There are many good elements in this margin expansion. Certainly, biggest factor is the strong expansion of margins in transmission, but also margins in the power distribution, the power grid space are holding up pretty, pretty, pretty well. In terms of net income, the LendingPoint group net income is €150,000,000 It is certainly affected by the growth, the financial charges to €73,000,000 which are, however, in line with our expectation and fully reflecting the impact of the acquisition.

And we have a temporary negative effect, which is on this non monetary item coming from the negative fair value of metal derivatives, which is sometimes a quite usual element. In our profit and loss, it is temporary, but it is weighing a bit on our Q1 twenty twenty five. We can move quickly to the cash flow. You see here, as usual, the bridge from March 24 to March 25 of our net debt, which is, of course, resulting in the last twelve months free cash flow. So you see the move of net debt from €1,700,000,000 before Ankur acquisition, of course, to the current $4800000000.04900000000.0 euros affected by the acquisition effect, almost entirely Ankur, affected positively by the net of the convertible bond conversion, which took place in the between June and July and the share buyback for a positive net effect of $3.57 And you see the pretty powerful free cash flow that we have generated in the last twelve months, which is at the $1,000,000,000 level and substantially in line with the full year 2024.

Of course, these still benefits a lot from the working capital changes, a drop close to $500,000,000 We may have some different distribution here throughout the quarters because you appreciate that the cash flows of the transmission business in particular are depending on milestones, are depending on down payments. So they don’t they never distribute equally over the quarters. But this is a very good start on track with our 1,000,000,000 midpoint of the full year guidance. Thanks a lot. And I give it back to Massimo.

Massimo Batayini, CEO, Prismean: Thank you, Francesco. Let me move to the guidance. We are still in the position to be pretty confident about this guidance with a midpoint of €2,300,000,000 despite some, as you know, turmoil in the American footprint. But the signs, the signal from the market, the customer wise in U. S.

Are pretty strong. They see a market demanding in terms of investment. They see a market demand in terms of cables for electrification and for special business, telecom business, I commented before. So we are in a position to confirm the midpoint of the guidance. Of course, we have two effects.

One that’s in the we expect to close the deal with the channel towards the June. So it will be before the end of quarter two. So we’ll have the full impact of semester of channel in our revised guidance that we will probably share with you in July. This is a great positive news and opportunity. On the other hand, we have some headwinds that you can expect in terms of ForEx, dollars, euro exchange rates.

For quarter one, we’ve been pretty much immune, but at the current level, we can see if this current level of exchange rate continue for the remainder of the year, we might see some additional headwind. We will be in July in the best position to revisit this guidance, including the business trend impact, which is positive from what we said, including the channel perimeter change and probably including some adverse impact from the ForEx exchange rate. Free cash flow confirmed at 1,000,000,000 for the full year. So we are super super satisfied by the performance of transmission, which is also our important pillar for the Capital Market Day. Our journey from 2,100,000,000.0 pro form a ’24 to 3,000,000,000 plus in ’28 relies a lot on transmission and the fact that in quarter one, we had expanded the business, we had expanded the margins, we had still a significant backlog that will help us navigate the next four years without the result into additional order intake to confirm our target makes us super confident that we achieved the 3,000,000,000 level mark for 2028.

The cash flow generation is always, as usual, an important strength of this company. It will continue to remain an important strength of this company. Channel position of Toldio is on track. We look forward to initiating in started integration from June onwards and making a common ground, making making a creating the common opportunity to make turn the telecom business in United States into a digital solution business with the connectivity and cables. And so the ’25 outlook case outlook is confirmed.

And in July, we’ll have a revised revised view for the full year. Thank you for your time. I think we can open to your Q and A session. Thank you.

Conference Operator: We will now take the first question from the line of Daniela Costa from Goldman Sachs. Please go ahead.

Elia, Analyst, Goldman Sachs: Hi, good morning. It’s actually Elia here on behalf of Daniela. So a couple of questions. First one on Power Grids, if you could provide some color on medium voltage versus HVAC performance? And also, if you can comment a bit on what you saw in U.

S. Versus Europe? And then on the wait and see you saw in The U. S, was that more on HVAC or on medium voltage? And then the second question is if you have done any pre buy during the quarter and if you’ve seen any pre buy from customers and so what we should expect as a consequence for free cash flow conversion?

Thank you.

Massimo Batayini, CEO, Prismean: Thank you, Daniela. So Power Grid, some more color. The the organic growth is is a little bit negative because last year in quarter one, we had a significant strong demand in volume and price in the overhead transmission business in US, which has now in quarter one, also in quarter three, quarter ’4 this year, not as strong in price, but also in volume as it was in the past. Medium voltage wise, the demand is still very strong to the point that you know that we have approved two months ago a significant investment in medium voltage in US and McKinney to both serve the ISC space and the power distribution space. The wait and see was about the fact that in quarter one, had some negative impact from the usual bad weather.

We had couple of factors that went on stop for two or three days. Customer could not really start installing cables due to the soil condition. The bet the the wait and see was about this situation. In March, as soon as the high season, the good season started, we saw this rebounding medium water demand Overhead transmission line, we have a kind of full coverage of 2025 in terms of backlog. So we are doing pretty well in this space in United States.

As far as Europe is concerned, demand remains scattered with a strong demand in North Europe, strong demand in UK, strong demand in Spain, weaker demand in France. So a different situation. But overall, we are this year, we will have the new capacity installed in Europe coming on stream, and this line is already full saturated through the rest of the year. So there is stronger situation across the board. Remember that in this space also we have a medium sorry, low voltage cable that remains a weaker segment of business across all geographies.

On the other hand, in the same space, probably we have a high voltage business, which is, I’ll say, super strong, super demanding to the point that we are not able to catch up with this demand. And we are about to decide to make a second investment in Europe for additional capacity. I and C US versus Europe. The US mean, you know that we were scared by US performance in January and February, but we knew that was something specific one off related to a negative combination of many factors, the weather, the low season, the behavior of some competitors in U. S.

And the sharp increase of copper price. The situation has completely changed. In March, behavior of the other players became more reasonable. We placed many price increase in the market in March. They all be they all been followed suit by all other competitors.

And in April, we continue along this trend. Europe remains also here a scattered situation. We have a generic demand good in terms of industrial commercial project, some stability with some good spike of demand in residential market. Pre buying, I I mean, we have not seen pre buying in Nuance, which is where you expect things be exposed to tariff impact. But we’re seeing customer that are working away from the usual importers channel in in afraid of being hit by tariff in the future.

So there’s been no additional demand in the market. There has been some of the customer used to buy from importers shifting the demand towards local players, Prismar and the others, of course.

Elia, Analyst, Goldman Sachs: That’s clear. Thank you.

Massimo Batayini, CEO, Prismean: Thank you, Larry.

Conference Operator: Thank you. We will now take the next question from the line of Akash Gupta from JPMorgan. Please go ahead.

Akash Gupta, Analyst, JPMorgan: Yes. Hi, good morning, Massimo, Francisco. I have two questions as well and I’ll ask one at a time. The first one is that I see that you are now moving to margin in constant metal price, which I guess makes sense as it removes impact from swing in metal prices. But can you tell us what does the new normalized margin will be in constant metal prices?

I mean previously you said you target 18% to 20% in transmission, 12% to 13% in grid. So how do they translate into a new margin definition? And where does electrification margins are going to sit on constant metal prices definition? So that’s the first one.

Massimo Batayini, CEO, Prismean: Okay. As far as the emission concern, the impact of metals metal standard metal prices versus current metal prices, not that much because, you know, the transmission is a little quantity of metal, and there is much more quantity of other material and installation activity. You’ve seen this in the quarter one, where margin at current was 16.6%, margin at standard was 16.9 so not a big deal. So we we confirm that in the mid mid long term target, so the capital market target, when we mentioned to you that it would be averaging around 18%, less 20%, you should add probably half a point to this target to recognize the effect of the standard meter margin in the transmission space. And on the contrary, in the I and C space, the differential is pretty higher.

I think we should consider a couple of points in incremental, a couple of points, 200 basis points additional if you convert it from current metal prices, current being quarter four, quarter one, twenty five into standard metal price. The level of copper in metal standard metal price is $5,500 The level of aluminum is $1,500 The level of lead, which is a minor metal, but we still buy it, is $2,000 per ton. And so you can make the comparison to the current metal prices. I I give you an additional I’ve given as an additional hint. So the current the famous anchor wire 15% EBITDA margin at current, we’re really close to 19% as standard.

Akash Gupta, Analyst, JPMorgan: Thank you. And my second one is on opportunity for market outperformance in The U. S. In electrification market. I mean, when we were at the Capital Markets Day, you talked about how Encode is complementing your offering and making you a full line supplier for all the types of cables that are required by distributors.

So we’ll be soon approaching to one year anniversary of close of Enco deal. And I wanted to get your thoughts on have you started to see any increased traction from distributors that may help you gaining market share given now you can supply literally all type of cables on both copper and aluminum conductor? So any thought on market outperformance that we should see in the remaining part of the year? Thank you.

Massimo Batayini, CEO, Prismean: Thank you. And Kashy, if I understand the question, it’s about the opportunity to sell more to distributors and the opportunity to leverage the synergies. We’re talking about the same stuff. We had already geared up the commercial organization, which basically is what we adopted from the Anchorwire acquisition. The agents who print Anchorwire is the new commercial organization in entire IMC space in United States for Prisma.

We already gear gear up this commercial organization to sell our products, not just the anchor wire products, so the copper and aluminum building wire, but also medium voltage cable, industrial cables, portable cords, electronics. Most of the stuff, we already either relocated in terms of production and McKinney, or we are at least relocate in terms of service, in terms of distribution center to McKinney. This is helping us deliver from McKinney across the entire I and C portfolio of products the best service level. So what we noticed that customer has recognized even recently that despite some, let’s say, contingent difficulties in the first two, three months in terms of maintain maintenance maintaining the same service level, in the last four months, our service level has been impeccable. They all appreciated the twenty four hours delivery.

Most of the month revenues, the month revenue are from stock, and most means 70% are from stock with twenty four hours. This advantage that used to be applied only to copper and aluminum milli wire now is applied basically to the entire portfolio, almost to entire portfolio of products that we deliver to the ANC space. So this is the rationale. This is the what we’re going to leverage to achieve the cross selling opportunity and the pricing improvement associated to the integration of the Two Perimeter. I hope I answered the question, Akash.

Akash Gupta, Analyst, JPMorgan: Thank you, Massimo.

Massimo Batayini, CEO, Prismean: Thank you.

Conference Operator: Thank you. We will now take the next question from the line of Chris Leonard from UBS. Please go ahead.

Chris Leonard, Analyst, UBS: Yes. Hi, there. If I could just ask a first question to clarify the electrification business and Encore why you’re saying that you’ve already achieved sort of 15% margin in April. I was just wondering if that’s also true. Are we seeing an improvement in the legacy IMC margins as well, excluding Encore?

And if so, has the demand has that been driven by higher demand for copper wire or aluminum wire? Or is that actually also from better pricing behavior that you commented on for competitors? Thanks.

Massimo Batayini, CEO, Prismean: March and April benefit from all those factors, Chris. There is additional volume in the market given the start of the high season is quarter March and quarter two certainly set to the start of the high season. So more volume in the market, more demand. As I said before, there is some customer already shifting, their supply chain from imports to local players. So this is also determining and impacting the additional demand.

We had better prices, no doubt. We had better price because, on the one hand, copper, copper and aluminum have stabilized a little bit in terms of level of price increase. We could, with a price improvement set in the market that fully offset their cost, which this was not the case in January and February for copper and aluminum building wire and actually go beyond setting their cost. So this level of profitability is now back to the level we had before. It is not just anchor to answer your question.

It’s also the rest of the I and C perimeter,

Luigi De Bellis, Analyst, Equita SIM: which

Massimo Batayini, CEO, Prismean: tend to be less less visible, less how to say, difficult it’s more difficult to carve it out because most so some so the entire copper production of legacy has been moved to Encore. Most of the aluminum building wire that we used to we still produce in our site, legacy Prisma, we are delivering to customer through Encore. So the two perimeters are fully fully, becoming very, very blended. And so the overall margin is is in line with what I tell you about the Encore wire margin.

Chris Leonard, Analyst, UBS: Okay. Thank you. That’s very clear. And maybe second question tying into electrification, but also maybe on power grid. What are you seeing for other indications of higher pricing on aluminum?

And is that being able to be absorbed across the market? And what if you can maybe update us as well on the sort of percentage exposure for aluminum on the new I and C divisional structure with Encore included and equally on Power Grids, just to give us a flavor of that shift to more local players and how that will impact revenue growth? Thanks.

Massimo Batayini, CEO, Prismean: Yeah. I will address first Power Grids where the Midwest premium, so the extra costs represented by tariffs is is part of the formula, in existing frame agreement contract with the customer. So this is a a simple pass through. As far as the aluminum impact into the electrification, so I and C space, We’ve we’ve seen the Midwest premium reflecting the impact of tariff even before tariff have been put in place. So from January onwards, we had seen Midwest premium increasing.

We have been able pass it on to the market because this is a common situation across all competitors. Satwire, ourselves, we all needed to source aluminum from us and production plants that are located outside of The US. And so tariff has become normal part of the cost. Of course, this will create more inflation in the cable space, in the activities where cables are required for investment in expansion of the grid, for investment in connection of building and so on to the grid. But so far, we don’t see we don’t know we didn’t notice any slowdown of market demand due to the incremental costs associated to metal increase due to tariffs.

Chris Leonard, Analyst, UBS: Okay. That’s great. Thanks for all the color. Super clear.

Conference Operator: Thank you.

Massimo Batayini, CEO, Prismean: You’re welcome.

Conference Operator: We will now take the next question from Kai Lucheng Huang from Barclays. Please go ahead.

Kai Lucheng Huang, Analyst, Barclays: Hi, there. Thank you for taking my question.

Uma Samlin, Analyst, Bank of America: Sorry about the noise. So

Kai Lucheng Huang, Analyst, Barclays: my first question is on Power Grids. I’m not sure if you thought already, but we’ve seen very resilient margin compared with some concerns on margin softness discussed in The U. S. Market last quarter. Do you still view the 12% to 13% as the right margin range, please?

Massimo Batayini, CEO, Prismean: We’ve seen resilience, yes. Maybe it was too negative last time when I mentioned a range of stabilization of margin in power grid between 1213%. I think from in standard terms, so in standard metal prices, we see this level of between 14.515.5%, so 15% midpoint stable over the coming quarters because the drivers are the same drivers. And in Pavabriida, not necessarily this year, but very, very significantly

Kai Lucheng Huang, Analyst, Barclays: next 7%

Massimo Batayini, CEO, Prismean: see an uptake in margin represented by the additional HBSC volume delivered to the market from our additional capacity. 15% level is what we expect to see in the coming quarters.

Kai Lucheng Huang, Analyst, Barclays: Okay, great. And if I can just follow-up on the power grid. So my next question is, was there any frame agreements due for renewal in the quarter? If so, was there any change on the price and duration with agreements or any terms and conditions?

Massimo Batayini, CEO, Prismean: There are frame agreements under renewable every quarters in U. S. As well outside The U. S. But as we all understand, if if even if they went out for tender, it is it’s very difficult for a customer to shift from supplier a to supplier b, especially supplier a has been excellent in terms of service level, in terms of reliability to deliver, in terms of quality, in terms of technological capabilities.

So we in the current frame agreement that being renewed in quarter one and what we see for quarter two, we haven’t seen a particular price pressure from the market. It is true that capacity coming on stream from all players, but it’s equally important to know that once you you gain an important leadership position in terms of share of wallet with the customer, there is a lot of resilience from this customer to ship from a different supplier to from you to a different supplier. So we haven’t seen pricing deceleration in the new frame agreement. On the contrary, our ability to keep adding stuff to the cables, like the monitoring devices, like the accessories, like the partial discharge measures. So there are lot of stuff that you add into cables to make our offer kind of unique.

So this is helping us when market is weak, stand the possible pricing pressure. When the market is strong as it is to further build additional volume opportunity.

Kai Lucheng Huang, Analyst, Barclays: That’s very clear. Thank you very much. I’ll go back to the queue.

Massimo Batayini, CEO, Prismean: Thank you.

Conference Operator: Thank you. We will now take the next question from the line of Monica Paseo from Intesa Sanpaolo. Please go ahead.

Monica Paseo, Analyst, Intesa Sanpaolo: Good morning all and thanks for taking my questions. I have three. The first is still on Power Grids, sorry. The start to the year was with a minus 2% organic decrease due to the tough comparison base. So should we expect the organic growth could turn positive from second half when the new capacity which come in force?

And if I’m not wrong, within the Power Grids segment, the weight of the low voltages is quite low, 20%, twenty five %, if I’m not wrong, low voltages are weak. When should we expect a recovery also in low voltages within the power grid segments? This is the first question. The second one is on transmission. The plus 50% organic growth in first quarter was materially above the market expectation.

We expect similar progress also in the next quarters? You guided for a 17% margin. I’m just wondering what could be the incremental adjusted EBITDA in absolute term by year end for transmission? And the very last is on the competitive environment in Industrial and Construction. Now pricing is you increase the pricing, the volumes are up, but any color on the competitive environment and the pricing discipline within the segment would be useful.

Thank you.

Massimo Batayini, CEO, Prismean: Thank you, Monica. Tough question, comprehensive question, well done. So let me try to answer one at a time. So PAVAGRID organic growth negative by 2%. The growth is, as I said, is a tough comparison due to the overhead transmission business particularly stronger in some projects in U.

S. In quarter one twenty twenty four. We see organic growth in the coming quarters on the way in the wake of an additional capacity, but also the additional of the strong season ahead of us. It would be it would not be a 10% organic growth, would be in the range of a mid single digit organic growth increase. Bear in mind that in quarter four last year, we had a significant growth in Power Grids.

So whether we’ll be able also in quarter four this year to maintain additional growth over year on year year on year over quarter four, we will see. But quarter two, quarter ’3, you will see organic growth turning to positive. The voltage has been very weaker since ever. So the reason is not that simple for us to understand to quantify, but, certainly, the demand of electricity driven by all the use cases that you are very very very aware of is affecting much more high voltage AC space and middle voltage space than it is with low voltage. It’s not that the demand is declining.

It’s not just growing. While the demand for medium voltage and and the HVAC is stronger in order to transmit more power and more more more quantity of energy to feed the electricity to the different users. So I don’t expect recovery in the low voltage space. Transmission, yes, super fantastic. We are super satisfied.

60% is was not conceivable a few months few quarters ago, but

Luigi De Bellis, Analyst, Equita SIM: we

Massimo Batayini, CEO, Prismean: did very well in terms of the cushion and in terms of benefiting from the high margin projects and the additional installation capability thanks to the new vessel. This confirmed that our strategy to invest both in manufacturing capacity and installation is really paying dividends different from what many competitors actually all other competitors have decided to do. So to focus only on manufacturing. Installation is an important part of the EBITDA margin increase, an important factor that drives organic growth increase. The full year EBITDA, we know it.

It is well defined because we are at the back of Inhanda. Last year we delivered $360,000,000 I didn’t mention at the Capital Market Day what the EBITDA target is for 2028, but I gave you many indication to allow you to figure this out. So we have to exceed the $100,000,000 target by 2028. So our journey from $360,000,000 in twenty twenty four million through $900,000,000 plus in 2028 goes through a significant increase in 2025 in the region over $350,000,000 driven by the same factor that you’ve seen in quarter one, execution, capacity increase across the board, so manufacturing and installation and better margin in our portfolio.

Monica Paseo, Analyst, Intesa Sanpaolo: All right. I’ll do my math. Thank you. Competitive Then on the power grid yes.

Massimo Batayini, CEO, Prismean: No, right. Sorry. I wanted to so you want me to answer the third question or you want to go back to Power Grids? Yes.

Monica Paseo, Analyst, Intesa Sanpaolo: Yes. Sure. Sure, Massimo. Sorry.

Massimo Batayini, CEO, Prismean: So third question was about the competitive environment in I and C. Yeah. We had some undisciplined behavior, let me say, in January and February, which were fully recorded in March and April. So the the whole market became more disciplined. As said, the pricing increases that we set in March were free.

They all they all three stuck into the market. So we had to maintain the price increase set every single time and cost and competitors fall them. This also is recognizing our power in the market in terms of leadership in pricing and also recognizing our longer our large position versus our partner channels distributors. And also recognizing that some of the some of the smaller distributor that used to buy products from imports are shifting to demand to the local suppliers. And this is a indirect benefit of the possible threat represented by tariffs, which are not yet in place anyway.

Monica Paseo, Analyst, Intesa Sanpaolo: Yes. Agreed. Thank you very much, Massimo. Thank you.

Massimo Batayini, CEO, Prismean: Welcome, Monica.

Conference Operator: Thank you. We will now take the next question from the line of Uma Samlin from Bank of America. Please go ahead.

Uma Samlin, Analyst, Bank of America: Hi, good morning, everyone. Thank you so much for taking my question. So my first one is follow-up on the electrification margins. As far as you mentioned that the behaviors in March and April have returned back to what you saw last year. Does that mean that your electrification margins likely to return to a similar level of last year something around like 9.5 to like 10.5% of margin profile?

And another one is on Encore that do you see any scope for the Encore margin to return to the previous like 20%, if you see any pickup in U. S. Construction? And my second question is on the founding of the channel acquisition. Would you be able to give us an update on the plans in terms of the mix of treasury shares and the sale of the shares of the YOFC?

That would be great. Thank you very much.

Massimo Batayini, CEO, Prismean: Thank you, Uma. So the let me comment to the income margin. March and April is in line with last year. When I mean last year, if you take I mean, the first six months were not known to you because we were we didn’t consolidate ANCO until July. Quarter ’3 last year, the EBITDA margin of ANCO or INC North America were more or less the same at 15%.

So when you mention this 20%, I don’t recognize it. The margin of ANCO were even higher than 20%, but we are talking about 2022, ’20 ’20 ’3. Was and also our IAC margin were pretty high driven by the significant scarcity of products due to the disruption of supply chain, scarcity of raw material that we due to the inflation that US was supposed to in ’20 in late twenty one and the whole of 2022. So from that moment onwards, EBITDA margin at Anchor and Prisma perimeter have stabilized at 15%, let me say, mid from first, second half ’20 ’20 ’3 onwards. And we had this dip in margin in November, December, January, February, November, December ’20 ’4 and January, February ’20 ’5.

March and April has restored the level of 15%. So we are we’re back to where we were, thanks to the strong demand, thanks to the behavior of competitors, and also thanks probably to some tariff indirect tariffs benefits. The the 15% current margin means the 19 standard metal margin that I mentioned before. So I will I don’t want you to get confused now from now onwards. We will report the standard margin, so margin is standard maples.

So the original 15% of anchors based on current margin will turn into 19%. The 19% is the level that we confirm from now onwards. Funding of channel acquisition, I’d like to hand over to Francesco for more detailed explanation. Thank you, Massimo.

Francesco, CFO, Prismean: As we said, as Massimo, by the way, anticipated that we are we certainly add to the closing of channel in the first half, end of May, beginning of June, we will see. It will be a balanced mix of debt and equity or equity like. And the important thing to register is that it will be absolutely consistent with our investment grade, okay? That’s the important point. The of course, there is a time line.

It’s not that we have to do these entirely in at closing time. It’s important to keep this financial position balanced throughout the year. We mentioned the instruments. We will resort to certainly the hybrid bonds, the subordinated bonds, which is currently pretty strong in terms of market after some, let me say, weaknesses that we saw in the market, I mean, a few weeks ago. I think that now the market is back and pretty much in good shape.

You saw, by the way, that we have activated some, let me call them, equity like such as, for instance, we decided to go for a placement of our YUFC stake. This is also a way to finance the transaction, which is, as a matter of fact, equivalent to equity in principle. Of course, this is also an instrument or a way to do that. What I can assure you is that we will certainly minimize the dilutive instruments. This doesn’t mean that they will be zero, I.

E, of course, but we will certainly minimize any dilution for the shareholders, keeping our financial structure totally in line and consistent with the investment grade.

Massimo Batayini, CEO, Prismean: Thank you, Francesco.

Uma Samlin, Analyst, Bank of America: That’s very helpful. Thank you very much.

Conference Operator: Thank you. We will now take the next question from the line of Miguel Borrega from BNP Paribas Exane. Please go ahead.

Massimo Batayini, CEO, Prismean0: Hi, good morning everyone. Thanks for taking my questions. I’ve got a few. So first on transmission, I was wondering if you could give us more detail on the margin performance of Q1. You mentioned execution and better mix.

Is it because of some specific project that started to kick in? Or is it because you’re delivering ahead of your initial budgets? And how much visibility do you really have ahead of the quarter? I ask because these projects usually have an estimated margin. And one quarter ago, you were guiding to 16% or slightly above 16% for the full year, and now you’re saying 17%.

Massimo Batayini, CEO, Prismean: Thank you, Miguel. When we plan and when we provide your forecast, we tend to be conservative because we want to make sure to beat it. So that is probably the reason why we plan for sustained and we deliver 17 But being specific on quarter one, yes, we had an execution in line with the expectation, in line with the margins of the project. We have some better margins projects in our back like Turena Linka and some others. Let me not be specific because, I mean, the customer also listened to the questions.

We have great visibility of this transmission business because the 17,000,000,000 backlog provide us these benefits, not only for the coming quarter, but for the remainder years through 2028. That’s why I can easily confirm that if you continue with this current base, which I don’t think we will be difficult to do, we will achieve a 17% plus EBITDA margin for the full year.

Massimo Batayini, CEO, Prismean0: Thank you. And then big picture, you saw yesterday Orsted’s canceling Hornsea four complaining about higher costs, etcetera. And I know you’ve been involved with Hornsea two and three. The political environment is also a little bit different in Europe. So how likely are we to see further cancellations in the European pipeline, not yours specifically, but more generally?

And can you give us some thoughts about the size and number of awards going forward? Would we see your backlog, for example, growing again or do you think it has peaked?

Massimo Batayini, CEO, Prismean: We have seen what you mentioned. There is certainly some pressure on some offshore business more than anything else. It’s a business that is not relevant to us, but you’re right. In terms of project pipelines, the inflation might cause some re re readjustment of the timeline or the permitting of some of these projects. So far, we still see a significant, and reliable list of pipeline of project ahead of us.

We are confirming. We still confirm the market size for 25,000,000,000 in the region of 15,000,000,000 plus. There are many awards. There is the Ipto Greek player playing the frame agreement. There is RT.

There is national grid with Eagle three, Eagle four. We will we are meant to improve our backlog, slightly improve it because we don’t want to exaggerate as we probably did in the past. Too too big of a backlog doesn’t allow us to play the proper role across all the new all the customers for the new projects. But undoubtedly, given the current 15,000,000,000 intake that we see for the MAP in ’25 and given that we will consume probably 2 and a half billion three three billion of our current backlog for the execution of the revenues in the coming quarters, you will see at the end of this year an increase margin increase to our overall backlog.

Massimo Batayini, CEO, Prismean0: Okay. Thank you very much.

Massimo Batayini, CEO, Prismean: Thank you, Miguel.

Conference Operator: We will now take the next question from the line of Lukas Cerhani from Jefferies. Please go ahead.

Massimo Batayini, CEO, Prismean1: Good morning. Thanks for the question. Could I ask about the trends you’re seeing for electrification, especially I and C in April so far? Are you still confident about kind of the improvement you’ve seen in March? Yes.

Massimo Batayini, CEO, Prismean: No, yes. When I commented March, also commented April because April is for us now a month that we already closed. The margins progression was strong in March or was January and February. In April, it was even stronger than March. So April has confirmed that the disciplined behavior of competitors, sustained demand for the market, the high season has reestablished very high level EBITDA margin in United States.

So in current terms, current metal terms at 15%, in standard metal terms close to the 19% that is the level that used to have in the quarter three last year when we first consolidated Anchor in our pyramid. So April is reassuring, comforting and setting the scene for hopefully for a good quarter too.

Massimo Batayini, CEO, Prismean1: Thank you. And generally, when we look at the full year, given this the the start you had, I remember, I think, in Q4, when talking about I and C margin into 2025 in current terms, you’re talking about maybe 10.5%, eleven % or maybe even 11% above 11% possible. Where do you think kind of you end up now for full year given the information and the visibility you have now on margins?

Massimo Batayini, CEO, Prismean: Yes. I think we have to distinguish where you talk current or you talk standard. Standard metal standard metal cost, the standard metal cost, the standard metal prices, sorry, the the level of the level of 13% is for the total group margin is what is what we can think of achieving. So if if take quarter one is 11.6, there is definitely a good a good cup, one and a half to two points increase for the for the full year for the remainder or the then the full year full year average, we will sit. But the the coming quarters two and three and four are suggesting in line of what we’ve seen in April that we can achieve the level of 13.7%, thirteen point five %, thirteen point five % for the full year.

Massimo Batayini, CEO, Prismean1: Okay. Thank you. And a quick follow-up just on offshore wind. Obviously, we’ve seen the stop order on Empire Wind. Obviously, you’re working on Coastal Virginia.

There hasn’t been any announcement there yet. But can you give us an idea of how much left do you have to do on that project? Is it the cable manufacturing now done? Is it just installation? And roughly in kind of 100,000,000, what would that be in terms of revenues?

Massimo Batayini, CEO, Prismean: There’s not much of what is left to be done. We had completed the production. We have finalized installation is a few tens of millions what is left to be done in terms of value.

Massimo Batayini, CEO, Prismean1: Perfect. Thank you.

Conference Operator: Thank you. We will now take the next question from the line of Xing Huang from Barclays. Please go ahead.

Kai Lucheng Huang, Analyst, Barclays: Hi, thank you again. So my next question is on the financial item. So net income is lower this quarter and part of the reason was this €55,000,000 loss on commodity derivatives. Can you maybe elaborate on this, please? Was there a change in how you do hedges in Q1?

Or maybe there’s some level of speculation on metal prices. How should we think about this line item going forward?

Francesco, CFO, Prismean: Thanks for the question. It’s quite the contrary. We are fully edging. And for this reason, we don’t manage for some technical accounting reasons to achieve an edge accounting treatment. And exactly for this reason, we have some metal, some significant metal derivatives, which has always been the case in the past, which fluctuates on our profit and loss in terms of fair value of these derivatives change.

And this is a temporary impact on our profit and loss, by the way, non cash impact on our profit and loss, and it will basically stabilize or disappear throughout the year. So no concern on that. No speculation at all, to be very clear, the contrary.

Kai Lucheng Huang, Analyst, Barclays: Okay. Excellent. You very much for confirming. You’re welcome. So my second question is on the high voltage demand.

So in April, Texas approved US10 billion dollars spending on six seventy five kV transmission line. Given Texas is basically your home base in The U. S, I assume Prisma is very well positioned to address this demand when it comes through. I think it’s too early stage, but do you have thoughts already? Would you need to build a new capacity?

And how fast can you get your facilities qualified for six seventy five kV?

Massimo Batayini, CEO, Prismean: We have qualification for the level of technology, of course, in The U. S. And also as well. We see U. S.

Committing committed to investing more in the grid. HV is one important piece of the grid. When we talk about HV in U. S. Is both underground cable and overhead transmission.

And we are pretty positive about the opportunity that we’ll see in this space. Also considering that part of this market is served by Koreans and should the tariff be one day implemented, all this market would most of this market will be restricted and limited and confined to local players. So that would be an additional opportunity to take advantage of our local presence in U. S. And local technological capabilities in U.

S.

Kai Lucheng Huang, Analyst, Barclays: That’s very good to know. Thank you for that. My last question if I may. So power blackouts, these were very rare in direct markets in the past, but are happening more often recently. What can Prismean do to enhance a greater resilience?

What are the commercial opportunities out there for Prismean?

Massimo Batayini, CEO, Prismean: What we can do is very simple. We can offer more cables because what is actually missing is utilities investing more in connecting the local grid, the country grid with the adhesions, neighbor country grids. This was a weakness. We know that it was a weakness in the energy footprint of Spain. It’s less it’s more reliant on local generation than it is on the integration, the interconnection with the adjacent countries.

This is a completely peculiar situation of Spain different from many other countries in Europe, which have at least 30% of their energy demand that connected and supplied by other countries. So the opportunity for us is important because there will be more interconnectors if they wanted to resolve the problem in a structural way. There will be more cable interconnect in Spain with other countries, either via land, so underground cables or submarine cables. It’s a new opportunity for additional stream of revenues.

Kai Lucheng Huang, Analyst, Barclays: Thanks very much. The one thing we didn’t probably touch on is digital solutions. Can you maybe update us on the demand and price in trends in Europe and U. S. Markets?

Has the first four months progressed as you expected? How should we think about coming quarters?

Massimo Batayini, CEO, Prismean: Yes. Thank you, Ox. Shin, the demand in U. S. Is very stronger.

To some extent, that has taken us by surprise. We haven’t realized that there was a significant surge in demand. We we struggle to respond with local capacity, and we are using other factories, European factory, basically, to supply and and top up the the local production in US. The demand remains strong because it has been very weak over the last two years due to the destocking mode that The US customer entering to after the big buying that happened in 2022. So coming quarter, we’ll see this demand remaining pretty solid.

And hopefully, we will see pricing improving because the demand overweight the available capacity. So there will be tightness in the supply chain. Europe is, on the contrary, not as strongly stable. Most of the country most of the country in Europe are more advanced in terms of fiber to the home rollout. We don’t have yet in Europe with additional stream of activity resulting, coming from the data center expansion.

There are data center implementation in Europe, not to the level of what we see in United States. So stability in Europe, pricing also stability in Europe, opportunity in U. S. With pricing opportunity in U. S.

Kai Lucheng Huang, Analyst, Barclays: Really good to hear. Thank you so much.

Massimo Batayini, CEO, Prismean: Thank you. You’re welcome.

Conference Operator: Thank you. We will now take the next question from the line of Alessandro Torcora from Mediobanca. Please go ahead.

Massimo Batayini, CEO, Prismean2: Yes. Hi. Good morning to everybody. I have three questions, okay, if may. The first one is, if you can come back a little bit on channel.

If you can comment also on, let’s say, about the triggers behind the earnout mechanism. I recall a very high profitability of channel, almost 40% EBITDA margin. So if you can help us understand if, let’s say, payment now is more linked to top line, top line acceleration you see for the current year. So that’s the first question. Let’s say, the second question, Mario, please if you want to go ahead, please.

Thanks.

Massimo Batayini, CEO, Prismean: So channel is now mechanism is, as you said, based on a base project baseline price of $150,000,000 plus a range of up to $200,000,000 All this is related to the EBITDA performing in 2025 for the full year performance of 2025. Based on our range of EBITDA, the €150,000,000 can grow as high as at 1,150,000,000.00 They are doing well. They did well in quarter one. They are, let’s say, well positioned to benefit from the market rebound also in the connectivity space. We anticipate a good quarter two also and then we’ll see what quarter three and quarter four will look like.

At that point, we will have them embedded in our perimeter. So that will be that is the mechanism of the announcement. If that’s I don’t know whether that’s enough for Alessandro.

Massimo Batayini, CEO, Prismean2: Okay. Thanks. Sorry, the line was not fantastic. You said in terms of EBITDA up to hundred and 50,000,000 sorry.

Massimo Batayini, CEO, Prismean: No. The price mechanism is based on a $950,000,000 minimum price, on top of which there are $200,000,000 of price increase if they achieve the certain thresholds, certain targets of EBITDA. So the amount price is based on EBITDA achieved at the end of twenty twenty five. For the time being, the EBITDA is doing better than last year. Quarter two is expected to be also positive, and we see what happened in the second half of this year.

Massimo Batayini, CEO, Prismean2: Okay. Okay. Thanks. And then the second question, okay, can answer the second and third one. If you can give us a full year indication for G and A for the full year considering the €150,000,000 level in Q1 and also on financial charges for the full year?

Thanks.

Francesco, CFO, Prismean: The D and A is quite simple, I think. If you make times four is a pretty good projection because we have now the full impact also of the amortization related to the price allocation of Ankor. So it should be quite linear. And for the financial charges, the indication that I can give is on a for a total of EUR260 million to EUR170 million for the full year. Not very different from the times four also in this case, a bit lower in this case.

We

Conference Operator: will now take the last question from the line of Luigi De Bellis from Equita SIM. Please go ahead.

Luigi De Bellis, Analyst, Equita SIM: Hi, good morning. I have three questions, if I may. The first one related to the transmission business. Could you elaborate on the potential pipeline of new project? How has visibility evolved compared to three months ago on your target market, so mainly TSO and Europe?

The second question, the new tariff introduced by U. S. Administration are creating will create significant disruption that could lead to a shift in global manufacturing flow. So do you see any risk of increased competition from Asian players in Europe or a specific segment of your business? And on the other side, could you elaborate on the trend you mentioned of shift of your customer in U.

S. And positive indirect impact from tariffs? And the last question regarding data center, is demanding evolving looking to your side? And have you observed any changes in the trend based on your current visibility? Thank you.

Massimo Batayini, CEO, Prismean: Thank you, Luigi. So transmission pipeline is, yes, we have the usual visibility. We have at least three three and a half years worth of projects in the pipelines with names of name, with definition of the of the route and all the rest. So we have we see through 2028. Of course, important to understand when this project will become tenders and they will become order intake.

So we have a great visibility of 2025 in terms of tendering activity because it is actually acting and happening as we speak. And we also have visibility of some tender that will be released into the market in twenty twenty twenty six. As far as the tariff is concerned, yes, there is a little bit of uncertainty as to what is gonna happen at the end of these ninety days. You know, that those ninety days commenced on the April 10. So through the July 10, there is this suspension of the tariffs and then we see what happened next.

What we noticed is a behavioral change in local customers, as I mentioned before, trying to shift away from the current supply chain, offshore supply chain, so shifting to local producer. I didn’t see any any any increase in aggressiveness in the Europe coming from those players, so redirecting their supply to European customer. This haven’t haven’t seen any changes, any indication coming from the market. As far as data center demand, we see still no changes. Demand is pretty strong.

We are gaining position in this space because now we leverage the portfolio, the synergistic portfolio, especially in U. S. And in Europe, we are weaker than we would like to be that we should so we should be more effective. So we are working more with close with potential contractors because while in U. S, the data center market is traded through distribution and we have a strong position there.

In Europe, it’s traded through contractors. So we are gaining position, we are gaining share in this space, thanks to our new relationship with these contractors. But in terms of overall demand, we don’t see changes.

Luigi De Bellis, Analyst, Equita SIM: Thank you very much, Paul.

Massimo Batayini, CEO, Prismean: Thank you. Welcome.

Conference Operator: Thank you. There are no further questions at this time. I would like to turn the conference back to Massimo Batayini for closing remarks.

Massimo Batayini, CEO, Prismean: So thank you for your time. I hope we appreciate you to gather this satisfactory quarter one performance and look forward to talking to you at the end of quarter two with similar outstanding performance. Thank you very much.

Conference Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.

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