Earnings call transcript: Tecnicas Reunidas sees strong Q2 2025 growth with 32% revenue increase

Tecnicas Reunidas reported a robust second quarter for 2025, with net sales reaching 1.4 billion euros, marking a 32% increase compared to the previous year. The company’s stock experienced a modest rise, with a 1.08% increase in share price, reflecting positive investor sentiment. Currently trading at $19.91, just 8% below its 52-week high of $21.60, the stock has shown remarkable resilience. The earnings call highlighted significant achievements in financial performance, strategic partnerships, and a strong project pipeline, positioning the company well for future growth.

According to InvestingPro, the company exhibits strong financial health with multiple positive indicators. InvestingPro subscribers have access to 12+ additional exclusive insights about Tecnicas Reunidas’ performance and valuation metrics.

Key Takeaways

• Tecnicas Reunidas achieved a record quarterly EBIT of 64 million euros, representing 4.5% of revenues.
• The company secured major service contracts valued at 120-130 million euros.
• A strategic partnership with Tanapec strengthens its position in Saudi projects.
• The workforce is expected to grow by 60% by 2025, underscoring expansion efforts.
• A robust project pipeline of 72.3 billion dollars is anticipated over the next two years.

Company Performance

Tecnicas Reunidas demonstrated strong performance in Q2 2025, continuing its streak of 12 consecutive quarters of growth. The company has strategically positioned itself in the energy transition sector, with a focus on low-carbon and energy projects. This aligns with broader industry trends as companies pivot towards sustainable and renewable energy solutions. The company’s technological credibility and strategic partnerships, such as those with Tyson Group and Aqua Power, enhance its competitive edge.

Financial Highlights

• Revenue: 1.4 billion euros, a 32% increase YoY
• EBIT: 64 million euros, 4.5% of revenues
• Net cash position: 422 million euros
• Equity levels: 654 million euros, including CEPI’s PPL

Outlook & Guidance

Tecnicas Reunidas anticipates potential revenue acceleration in 2025, with projections around 5.6 billion euros. The company plans to provide precise revenue guidance in the coming months. Additionally, there is a focus on improving EBIT margins through the services business and strategically repaying CEPI loans. The company’s expansion efforts, particularly in engineering capacity in Spain and India, support its growth trajectory.

Executive Commentary

CEO Eduardo Samir emphasized the company’s evolving role, stating, "We have succeeded in being considered not only as a good EPICist, but as a company that can render solidly pure services." Chairman Juan Yelo noted the positive market environment, highlighting opportunities in various regions. The executives’ remarks underscore confidence in the company’s strategic direction and market position.

Risks and Challenges

• Potential geopolitical tensions in the Middle East could impact project timelines.
• Fluctuations in oil and gas prices may affect investment in energy projects.
• Supply chain disruptions could pose challenges to project execution.
• The competitive landscape in the energy transition sector requires continuous innovation.

Q&A

During the Q&A session, analysts inquired about the timeline for the Aqua Power FEED study, which was confirmed to be 10 months. The company also addressed the positive resolution of upstream/refining project liabilities and clarified there are no plans for a rights issue to repay CEPI loans. Additionally, a potential EPC stake of around 60% in the Aqua Power project was discussed.

Tecnicas Reunidas’ Q2 2025 performance reflects its strong market position and strategic focus on energy transition projects. With a solid financial foundation and an expanding workforce, the company is well-positioned to capitalize on emerging opportunities in the sector.

Full transcript - Tecnicas Reunidas (TRE) Q2 2025:

Eduardo Samir, CEO, TR: Good morning, and welcome to TR’s First Semester Results Presentation. It’s going to be conducted by our Chairman, Juan Yelo and our CEO, Eduardo Samir. It’s going to last about fifteen minutes, and you will be able to post your questions after the final remarks. I now leave the floor to Juan Diego.

Juan Yelo, Chairman, TR: Thank you, Antonio, and good morning, everyone. Thanks for joining us today on our first half results presentation for 2025, where both Eduardo and Miguel and I will guide you through the most relevant issues that have taken place this first half of the year 2025. And first, as usual, I’ll share with you a glance of our business performance. And Eduardo will follow a presentation finalizing with the financial results. And as usual as well, I will do a wrap up with some financial final remarks.

So let’s move on with the business performance. Three big numbers here. First, let’s talk about our presence. Our presence are the $3,800,000,000 of order intake. Order intake with extremely good quality EPCs and a very healthy mix with technological engineering services, very much in line with our focus and our strategy that I will talk about later on.

Second number is our immediate and healthy visibility for the next years. That’s the year to date backlog, dollars 13,100,000,000.0 of healthy backlog. This is our visibility. And third, which I think is very important now, this is a real future. This is our future with a very strong and selected pipeline.

A strong and selected $72,300,000,000 for the next two years. The pipeline is not only the future pipeline or the jobs that we are already bidding, that we have been already prequalified and getting ready to bid, or that we have been invited to bid and we have to answer whether or which jobs do we want to bid. And it’s a big number and let me tell you, it’s a very healthy number. And it does represent, as I said in my note, a very positive environment. We are working in an extremely positive environment.

It also is very important because you have to get invited to bid. It also represents the value of TR’s franchise, which is nowadays very strong. So let’s focus on what has happened this quarter in terms of award. And I’d like to focus on our service unit, our service business. Let’s focus on the more than €120,000,000 almost €130,000,000 awarded this last quarter.

And I’d like to stress or send three messages. A message of engineering quality and engineering capacity. A message on technology. And the third message on credibility and trust with our industry leaders, which are defining their future, and we’re defining with them our future as well. So let’s go over these four very important jobs.

Our joint success with Tyson Group, which everybody knows that it’s an industry leader among many chemical disciplines, in this case fertilizer leader, fertilizer discipline. We joined them with our own technology for a big size fertilizer project that we cannot disclose customer cannot disclose. We can’t disclose that we are partnering with Tyson, which is with this group, which is which is an honor. And I’m sure we’re gonna do a great job together. 65 is our scope.

65 medium is our scope. So this is a big job and very technological and large job. Second, our successful result in large, quite large, clean fuel front end for more than €35,000,000 which shows we very much focus and align our service strategy. It reflects again our engineering technology and credibility, €35,000,000 on front end, if you compare with other ones, is a big job. Third, and this is very important, which reflects technological credibility in the region is a very large you know, that we’re going to be working for a very large Middle East national oil company, which that company has entrusted TR for the digitalization design of some of their facilities.

Again, engineering capacity, technology, and credibility. Very important. And the last one, which is probably the most important one, we’ve been awarded by Aqua Power with the front end, with the rollover possibility or opportunity for the largest green hydrogen, green ammonia investment in the world. And let me move to the next slide, because I think this job and this award deserves using this slide by itself. And it is, as I said, an important slide, because I think in this slide with many words and numbers, it summarizes in itself full TR strategy.

It is this is the SALTIS strategy that we presented to you about a year and a few months ago. This is a strategy which shows that we fully focus on customers and market. We focus in Saudi Arabia, where we have delivered many jobs from petrochemical, gas, power now, for Aramco, SABIC, SEG, and Aqua, and now we focus with Aqua. Aqua, this is the third job that we’re going to be working for them and with them. The second message here is that we are engineering services.

Engineering services and very much focus, as you can see here, in low carbon focus. This is our low carbon focus strategy. The third message within our strategy is that we continue focusing on working with the strategic partners. And in this very specific case, our strategic partner, Tanopec. This is the third job in Saudi Arabia, and as you know, we’re working with them in other different regions around the world.

This is a successful it’s a good partner, and it’s a very successful strategy. And all these three very important messages on which converge the full strategy wrapped up within the largest ammonia plant in the world. The largest ammonia plant in the world that is labeled by the Saudi authorities the Saudi Europe corridor. Saudi authorities are developing the largest investments in the world with the agreements with the European buyers to build the largest corridor in hydrogen, green hydrogen, and ammonia. And for that investment, which is huge, You know, they have decided, and we’re proud to be that TR will be one of the players together with a very good partner, Tanapac.

And now with this message, Eduardo will continue with the presentation.

Eduardo Samir, CEO, TR: Okay. Thank you, Juan. Good morning, everyone. In the previous slides, we have seen that it seems we have broken a glass ceiling. We have been fighting last year to be considered by our clients, not only as a good EPICist, but also as a company that can render solidly pure services.

And we have succeeded. Now, it is time to revisit the effort we have been doing in the past to adapt our workforce to this new scenario. And again, we believe we have done the job correctly and we are ready to absorb all the new activity that will demand our new only services business line. Our workforce will reach 13,500 employees by the 2025. This represents a 60% increase in the last two years.

We are strengthening our engineering capacity across all our key locations. In our headquarters in Spain, our May hub, we are already close to 6,000 people, 90% are engineers. In India, we have concentrated our efforts searching for first quality engineering and competitive costs. Early twenty twenty six, we will have more than 2,000 people in our offices of Bangalore and Chennai. And we continue to strengthen our engineering offices of Emirates and Saudi Arabia with a purpose of being closer to our clients.

The good news is we still see room for growth in all those geographies. We have the talent and we have the capacity needed to execute our business plan. Let’s now take a look at our financial performance. But let me first point out our figures. Our figures have improved once again.

It is the twelfth quarter in a row of growth. And what is more important to us, it has always been aligned with our previous guidance. The numbers. Our net sales have reached EUR 1,400,000,000.0 in the second quarter. This represents a 32% increase compared to the 2024 and is a reflection of our solid €13,100,000,000 backlog.

Regarding our EBIT for the second quarter of the year, it has increased to €64,000,000 reaching 4.5% of our revenues. Euros 64,000,000 is the highest ever quarterly EBIT delivered by TR in its history, and the 4.5% margin is fully aligned with our guidance for the full year. The EBIT improvement is a consequence of a solid operational performance, the implementation of risk mitigation measures and our commercial strategy focused on being very selective. So finally, solid numbers in terms of revenues margins. Let’s now take a look at our balance sheet figures.

Our net cash remains at €422,000,000 a level where we feel very comfortable since it allows us simultaneously to grow, but also to manage efficiently our business. There is a threshold of cash needed to provide comfort to our clients and banks. But beyond that threshold, our policy is to inject as much cash as we can to our suppliers and subcontractors. There are two main benefits of this policy. Better terms of payment improved dramatically the ability of suppliers and subcontractors to execute its scope of work on time, reducing significantly our risk of delays potential penalties.

And obviously, we can also agree more favorable purchasing conditions, mainly volume rebates and priority delivery In summary, cash allows us to manage the business efficiently. Regarding the equity levels, we ended the semester in a robust position of €654,000,000 including Cepis PPL. Let me remind you that our primary goal was to reach pre COVID equity levels And that has already been achieved even without the SETI’s PPL. And finally, I would like to give you some color about two relevant issues we cannot still provide you full visibility. Revenues.

It’s a fact that the revenues are growing above our guidance. If we repeat the volume of revenues we had last quarter during the second half of the year, we will have around €600,000,000 this year 2025. The main reason is many projects are required to be accelerated because our clients are demanding it. We are currently negotiating compensations for some of these accelerations as a prior step to accelerate. We expect to have a complete understanding of this agreement by mid September and the final figure of revenues can be even above those $5,600,000,000 I mentioned before.

But the most accurate revenue guidance for the years 2025 and 2026 will provided last September, early October. And regarding the CEPI loans repayment, my message is this is not a financial matter anymore. It is an strategic decision that we will take after summer. We still believe support is useful with certain clients, but obviously, we also want to repay SEPI quickly in order to reduce the financial cost and pay dividends. So in both cases, we’re talking about potential good news in the second half.

But for the time being, we want to be realistic and accurate. And now let me give back the floor to Juan for the final remarks.

Juan Yelo, Chairman, TR: Hello again. Most important remark is not a remark, it’s an invitation to all of you to our Investors Day next October 2. It will be here in Madrid in our premises, and I think it will be a good opportunity to see and understand how we work and where we’re going. So with this reminder, with this invitation, and also with a very good order intake, with a healthy backlog, with a growth in sales, with a record EBIT, within margin guidance, and with the affirmative cash, let me wish you all a very good summer.

Antonio, Conference Moderator: Thank you. And ladies and gentlemen, the Q and A session starts And our first question comes from the line of Ignacio Dominique with JB Capital.

Ignacio Dominique, Analyst, JB Capital: I have two questions. The first one is on the commercial pipeline update, significant increase quarter on quarter. If you can give us some color on what’s driving the increase, I suspect there this project in Hydrogen Press in Saudi Arabia could explain something. But just wanted to get your view if actually this project is also ramping up the pipeline, especially in this division, in the energy transition? And also in line with this question, given the strong momentum, how should we think about order intake in the second half of the year?

Do you expect a material acceleration in the second half? And the second question is just related to the balance sheet position, which is quite strong. So I was wondering how should we think about the resumption of the dividend payment

Eduardo Samir, CEO, TR: the partial

Ignacio Dominique, Analyst, JB Capital: repayment of the FEPE debt? Thank you.

Juan Yelo, Chairman, TR: I mean, it’s true, and we have presented a stronger pipeline. That stronger pipeline, it shows growth and a very solid growth in The Middle East as a whole. I mean, in The Middle East and all the countries are launching and representing already offers in big projects and big investments with the different price altogether. It is not only growth in gas and petrochemical, it also includes growth in power and growth in low carbon investments, which as I said, they’re already taking place. So it’s important as The Middle East on everything.

There is growth again and opportunities in The United States, in America, which is which we have included. We’re already getting invited to important investments, some of them low carbon. And third and finally, we’re expecting also some some conversions. So there is growth, and that is what we pointed. The environment is good, and there is good on the different regions with the weight, obviously, in The Middle East.

In terms of value, we’re talking about awards this second part of the year. We’re presenting offers now. We do believe that it shouldn’t be a great challenge to get awards to replace sales. That shouldn’t be a great challenge. It could be some, you know, which happens very often, the final award doesn’t take place until January or February.

But, know, give or take one month or two, I think it shouldn’t be a great challenge. I mean, by the number of offers that we are presenting already and we do have to present in September and October. Ilu is good and we are positive about it. But I cannot give you far more details here. We enter within what messages we are giving to our competitors.

So but it is good. You know, let me let me let me be let us all be optimistic.

Eduardo Samir, CEO, TR: Okay. Regarding the balance sheet question, think it’s a very open question. It’s a fact that the balance sheet is stronger than before. It’s bigger, it’s bigger. We have more receivables.

We have more payables. It’s a fact, but it’s a consequence that the activity compared semester versus semester, we have grown 32%. So obviously, the figures have to grow. But the cash is improving. The working capital is improving.

I mean, as you say, it’s on a stronger balance. So we are happy with it. CPE has nothing to do with the strength of our balance sheet. CPE, as I told you, is a decision that has to do with how do we feel more comfortable when bargaining, when negotiating critical matters with our clients. After some error, we will make that decision and it will be communicated.

So that’s a fact going to happen. But if we are talking about how this will impact our dividend policy because you have mentioned it as well. Yes, we have the cash and we are planning to repay SAP in advance. I don’t know when, but that’s the idea. Yes, it’s a fact.

But we told you clearly that the idea was dividends would be paid against the results of 2026. I mean, do not expect that through advancing the repayment of CEPI this year, we can be paying dividends this year 2025. That’s not idea. That’s not what we told you in the Capital Markets Day in Abu Dhabi, and we still believe that’s correct. That’s the right way to act.

So you’re right. We have a better balance sheet. We will see a reduction because CPIP hopefully will not be in the balance sheet by the end of the year, let’s see, but the dividends will not come until 2023 results.

Antonio, Conference Moderator: And your next question comes from the line of Mick Pickup with Barclays.

Mick Pickup, Analyst, Barclays: Good morning, team. I hope you’re doing well. A couple of questions, if I may. Just on the Aqua Power feed, that ten months to do the 100,000 engineering hours, Is that the time frame we should be looking at for this to convert into an EPC? Is that time frame to get to negotiations to come up with a EPC price?

And secondly, just looking at your results at the back, you give the EBIT margin breakdowns by business line. The upstream and refining business clearly dragging on profitability at the moment. When do those problem contracts finish? And when can we expect that to start hitting positive territory again?

Eduardo Samir, CEO, TR: Hi, Mick. Good morning. Hi. To the first question, the answer is yes. We have two months to complete the FEED and to fix our price for a potential EPC.

That’s the idea. And we’re very proud and we I’ve told the other day and the Aqua team, they will have our best team because we want to absolutely succeed in this project because it’s critical and it’s a game changer. I think we are extremely happy with that project. And also personalities, I think, is a success because it’s a tick in all our main messages that have to do with the CALTA strategy. It’s services, it’s energy transition, transition, it’s partnership around the world, it’s being close to the client.

It’s perfect. It’s perfect. So yes, we have ten months to do the FEED and to define which is the correct price for an Regarding the second question, you are right. It’s in the refining sector. We are seeing the results of a number of projects that are already completed and we are negotiating with clients and subcontractors the final agreements.

We are very, very close to an end. It’s four projects. I think we have done the right estimations. Many those agreements have already been done. I mean, it’s not an estimation.

It’s the real cost. And we do not expect significant increases in the future. Okay. And can I just do

Mick Pickup, Analyst, Barclays: a follow-up on the data you’ve given here? Obviously, aqua power is 100,000 engineering hours for €8,000,000 Is there anything different on the feeds, which are much bigger than that, so I can start scaling how many hours each of those is? Obviously, some of the feeds, you’re talking €65,000,000, which is well, looks huge for a feed study. So is there anything unusual in those other feed studies?

Eduardo Samir, CEO, TR: Nick, can you can you rephrase the the question, please, once again?

Mick Pickup, Analyst, Barclays: Yeah. I’m just looking at so you’re saying Aqua Power is a 100,000 of engineering, and that’s €8,000,000 you gave out on the previous slide. Some of the other fees to these are €65,000,000. So can I scale the man hours, or are there other things associated with those fees, like licenses or other things and why they’re so big?

Juan Yelo, Chairman, TR: Yep. I mean, give or take, you know, give or take 10,000 man hours is about 50 people, In give or take this case so and and then you can do it depends on the fees, depends on the quality of the cost and fees of the different engineers. If you, you know, it also depends on whether we have to work with licensors. But it is a you can do a gross number escalation, and it would make sense it would take.

Eduardo Samir, CEO, TR: Okay. Perfect. Thank you. Have a good summer.

Antonio, Conference Moderator: And your next question comes from the line of Kevin Roger with Kepler Cheuvreux. I

Kevin Roger, Analyst, Kepler Cheuvreux: will have maybe just one question on this success that you had in terms of services over the past months and the fact that you secured now more than €130,000,000 services contract that you guided a few quarters ago to be generating a margin of more than 30%. So I was wondering, those this commercial success in a way, does it change also a bit the outlook that you expect on the marginality for 2026, if you are a bit more successful than you anticipated? And you were guiding us for a margin of more than 5% in 2026. So maybe to understand the potential impact of this commercial success on the 2026 EBIT margin expectation, please.

Eduardo Samir, CEO, TR: Maybe you’re right. The question is perfect. It’s not a question. It’s an answer, in fact. Obviously, we are successful in our services activity.

Obviously, it will have an impact in our results. And percentage wise, the EBIT has to improve. That was our message in the Capital Markets Day, and that was the main driver of growth of our margins when we’re talking about the year 2028. But little by little, it has to become a reality. I mean, every year, we will see improvements because our services activity will grow.

But let me give you a bit more visibility about the volumes and the margins and the impact in the Investor Day because I think we still have to see how the second half of the year evolves. We are happy. We are happy with the margins we are getting from the existing services contract. They are quite aligned with our original expectation. But give us some time to analyze in detail what is the most accurate answer to how it’s going to impact 2026 and beyond.

Kevin Roger, Analyst, Kepler Cheuvreux: Okay. Understood. And maybe just as a follow-up on the question from Mick. So just to be sure I understand correctly the answer that you provided, we have now to assume that the H2 EBITDA on this Upstream refining division would be at breakeven?

Eduardo Samir, CEO, TR: Hopefully, it’s not breakeven. It should be positive from the existing new projects that will deliver profit. But if the answer is, should we expect additional deteriorations because of those projects we are closing? The answer is we do not expect additional costs.

Ignacio Dominique, Analyst, JB Capital: Okay. Thanks for the time.

Antonio, Conference Moderator: Thank you. Your next question comes from the line of Juan Canovas with Elantra. Please go ahead.

Juan Canovas, Analyst, Elantra: Hi. Good day. I have a couple of follow-up questions. Regarding the PPA loan from the CEPI, would you consider a rights issue? Or can you rule that out?

And that’s the first one. And then for the Agua project, is this EUR 4,000,000,000 potential EPC you share of the project? Or would you have to share that with Sinopec? And finally, I would like to know whether you can give us an update on the contingent liabilities you had. I mean, the host all those projects under discussion, how are they going, whether any of them has been closed?

Thank you.

Eduardo Samir, CEO, TR: Regarding the PPL, are you considering the right issue? From the very beginning, we decided that once we repay the PPL, the relationship with SEPI finished. So there is no idea because probably that is the real question behind your question. We have no idea to allow SEPI to stay in our structure of shareholders. So that’s the first answer.

Regarding Aqua, if we convert EUR 4,000,000,000 into EPC, our stake is around 60%, but we still have to negotiate with Sinopec and with our clients. So we have to wait and see, but no more than 60%. And the third question has to do with litigation and contingent liabilities. We are expecting the resolution of some of those litigations, major litigations just after summer. We are very positive.

And we are also negotiating some of the litigations with our clients. And I can tell you that our feeling today is that the outcome is going to be positive for us as well. So positive means that it will have at least no impact in our accounts. Thank

Juan Canovas, Analyst, Elantra: you. Can I just ask about your first answer, the one regarding the CEPI? I was not meaning the CEPI staying in your shareholding, but whether you would issue new equity to repay the CEPI. I mean, that was my question. Thank you.

Eduardo Samir, CEO, TR: No, the message was clear from my side, I think. We already have cash available in our balance sheet. So I do not see why should we need to do a right issue.

Juan Canovas, Analyst, Elantra: Fantastic. Thank you so much.

Antonio, Conference Moderator: And our last question comes from the line of Felipe Leed with CaixaBank. Please go ahead.

Juan Yelo, Chairman, TR: Yes. Hi. Good morning. I have just one final question regarding net cash evolution after the flat performance of this quarter. How do you see net cash evolution from today until the end of the

Eduardo Samir, CEO, TR: Hello. It’s not that easy to answer this question. As I have told you during the presentation, the idea is there is a threshold. And we cannot go beyond that figure. And now you’re going to trust me, which is that threshold.

I don’t know, but my feeling is that when we are being clearly about the $3.50, it has been enough for investors, for banks not for investors, sorry, for banks, for clients. So somehow somewhere around that figure should be that threshold. Any money we receive above this figure, the best idea we’re to have is to inject it in the suppliers. That’s my message. I understand perfectly that if our results are improving, we have to find a way to convert the results into cash.

And if and that could be the philosophy. I mean, we need to find a figure that reflects this that it’s not just we’re growing for the sake of growing. We are growing because the EBIT converts into cash. That’s the idea. But do not expect a massive growth because things are going well, because does not this is not the strategy.

It’s something different. Something that could impact significantly the results of the year is that a number of EPCs be awarded by the end of the year, early twenty twenty six. And obviously that could have an impact if they bring large down payments. But I do not expect to see EUR 500,000,000 by the end of the year because that’s not my idea. That’s not the right strategy.

We shouldn’t be far from the existing numbers. That’s my idea.

Juan Yelo, Chairman, TR: That’s very clear. Thank you.

Antonio, Conference Moderator: And we have no further questions at this time. I would like to turn it back to our speakers for closing remarks.

Juan Yelo, Chairman, TR: Okay. We’re all done. It’s the July 31. And hope to see you or see most of you or all of you here in October on Investor Day. And thanks again, and have a have a very good summer.

Antonio, Conference Moderator: Thank you, presenters. And this concludes today’s conference call. Thank you all for joining. You may now disconnect.

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