Elecnor, S.A. (ELNRF) Q4 2025 Earnings Call Prepared Remarks Transcript

2026-02-27 11:57:47 ET

Elecnor, S.A. (ELNRF) Q4 2025 Earnings Call February 27, 2026 6:00 AM EST

Company Participants

Alexander Arrola González

Presentation

Alexander Arrola González ...

[Interpreted] Good morning, ladies and gentlemen, shareholders, analysts and other stakeholders. First of all, we would like to thank you for your interest in following the performance of the businesses that make up the Elecnor Group. I'd really like to extend a warm welcome to those of you connecting this webcast from outside Spain. We truly appreciate your interest and confidence in our company.

I'm also pleased to inform you that for the first time, we offer the possibility to follow this presentation in English through simultaneous translation. As we have been doing regularly, we will begin by reviewing the main key figures achieved by the group in 2025. We will then continue with an analysis of the performance of the activity segments into which Elecnor's businesses are structured.

And we will continue with the key figures corresponding to the consolidated financial statements for this period 2025 as well as with the performance of our share price on the stock market. We will also address the group's ESG commitments, and we will leave some time afterwards to respond to any questions that may arise.

So allow me to look at the main key figures that we have achieved -- the group has achieved in 2025. First and foremost, the net profit from continuing operations reached EUR 110.7 million, which is a difference to 2024, which was given the surplus given the sale and meant an extraordinary result. This EUR 110.7 million allows us to reach one of the targets that we set in the plan, which was to recover as quickly as possible the previous results.

So we've been able to reach them. As for the EBITDA, we have reached nearly EUR 268 million, a significant increase vis-a-vis 2024. And likewise, we are focused on driving the margins of the different businesses that make up the Elecnor Group, and we will see this in more detail.

The turnover has reached EUR 4.3 billion, which represents an increase of 15.1%, driven by the largest projects that have been executed outside as well as the very good performance of the Services segment. The net cash flow from operating activities before taxation is at EUR 364.2 million. We recognize an excellent data, which represents a plus 10.8% vis-a-vis the previous year, where we reached EUR 328 million, which is a very good indicator of the financial solidity of the businesses of the group.

And thanks to that, we have been able to end the year with a cash flow of EUR 200 million approximately which means an increase of 6% vis-a-vis 2024 after having distributed in dividends all the profit that after the sale that we said before. The executive backlog in the next 12 months has increased by 5% compared to the previous year, driven by the different macro trends, which are allowing that outlook of the group or the forecasts are good.

Dividend suggested for 2025 amounts to EUR 44 million, which represents a 12.4% increase compared to the previous year -- compared to 2023, 2024, it's a very special year and a 12.4% increase, which means an increase of the payout, which is 40% higher compared to previous years, which was around 36%. Both the very good performance of businesses, the cash flow that we are creating, the financial instruments that we have reinforces or allows us to reaffirm our commitments that for 2025 to 2027, we will be able to exceed EUR 220 million in dividends. I would like to talk about the key operational figures for 2025.

The net profit is EUR 110.7 million, EBITDA EUR 267.8 million and a turnover of nearly EUR 4,400 million. What we can see on this slide is that the Elecnor Group has a significant weight on the Services segment, and we will look at the characteristics and the performance in this first part of the presentation, 55.3% of the net profit corresponds to services and 50.3% of the EBITDA and more than 50% -- 55.3% of the turnover corresponds to the services.

With regards to projects, they represent 35.9% in net profit, 46.4% in EBITDA and nearly 45% of the turnover. The concessions and own projects segments whereby we manage through AGP and Celeo represent nearly 9% in the net profit and 3.3% in the EBITDA. The integration of Celeo in the accounts, we have a joint control together with the partner, AGP, and it's representing 51%, but we cannot look at the dimension of the Celeo and well, it allows us to see the great value that we have in the group rather.

And looking at one of the topics that was addressed at the strategic plan that we shared last month at the Investors Day, we would like to look at where we are concentrating our businesses. These EUR 4.4 billion in sales, 52% of which are achieved in Europe, specifically in Spain. In Central and South America, we have around 27% of sales in Australia, 9.2%; in North America, 9%; and in Angola, 2.7%. And we would like to highlight the following.

We work to strengthening the business and our performance as to becoming the top 8 -- these are 2 top 8 strategic countries account -- like Italy, Spain, Brazil, Chile, Dominican Republic, Australia, United States and Angola. So in the more strategic diagnosis, we said that 50% of the sales came from -- well, 88% of the sales came from these countries. For 2025, we see that we are confirming this trend.

So 88% of sales come from these top 8 strategic countries. With regards to sales by business activity, we can see on the slide that over 50% of the activities are related to electricity. These are projects, transmission construction projects as well as O&M operation and maintenance of -- for the distribution and low and medium voltage with utilities.

These are the traditional projects for Elecnor apart from energy production, facilities and construction, maintenance and then -- maintenance, we are still making progress, and we are consolidating figures that we had in the maintenance activity. This is a service activity that plays a very important role in the years to come. And then looking at some other main figures, the executable backlog in the next 12 months. So that project is part of this figure needs to be under a contract.

We have had to have approved all the phases with the customer. In case there's an upfront payment, this payment has to be made. And these correspond to the executable backlog in the next 12 months. Like in the services projects or segments, it's normal to have multiannual projects. So we only consider those that are going to be executed in the following 12 months, what you can see. So this represents 5% more compared to what we had at the end of the previous year. And this is an evidence of the outlook that we had for the following period.

With regards to the distribution by business segments, projects represent 60% approximately and services and 41%. And with regards to the geographical distribution, nearly 70% is international and 30% from Spain. This clearly evidences our international orientation in the group. Let's move on to analyze business segments.

First, I would like to recall -- remind you that this is the first financial year where we segment the group's activity in these 3 segments. And doing a business overview among the objectives that we had when we did the strategic plan reflection, they don't have the same risk profile. They're not analyzed equally, and they don't have the same cash flow generation, services and projects and even less our investments in concessions and own projects.

So within this new organization, we have 3 general business directors. And based on these 3 segments, we would like to share the analysis, and we've been communicating our results in a continuous manner based on these 3 segments that you can see on the slide.

So let's start off by explaining the performance of services. As we said before, Elecnor, 55% of the business at Elecnor is related with this first segment. And this segment integrates energy distribution, telecommunications, maintenance and installation services, which are essential to generating change and driving well-being in those countries where we operate. Sales in services reached to EUR 2.4 billion. And this represents an increase of 12.5% compared to the previous year.

As for the -- well, the domestic market has driven this growth, especially services that we develop in electricity and telecommunications, water and transmission and distribution of energy. I would like to highlight the maintenance activity carried out for both the public and private sectors as well as some initiatives of self-consumption and energy efficiency initiatives in the international market.

We provide services in the U.S. and in Italy in a significant manner. And this market, well distribution contracts and telecommunications has contributed significantly to the segment's performance. EBITDA in the Service segment reached to -- reached EUR 144.2 million this year, representing an increase of 37.4% and the margin -- the EBITDA margin on sales for the period is 6%. And especially -- well, what's important is the margin obtained the EUR 144.2 million this year is a profit before tax of EUR 85 million with a consolidated of the attributed consolidated net profit of EUR 61.5 million.

Let's move on to projects. The segment comprises development, construction, operation and maintenance. And it drives the goal to improve the conditions of the communities and enhancing sustainable development in those countries where we operate. There we can see some figures. And this -- the Projects segment showed a solid performance during this year. 91% of the sales are outside Spain.

And in 2025, countries like Brazil has had very good performances. Australia have been above EUR 300 million with a very special project. The Dominican Republic, where we have a business activity of EUR 300 million and which has been strategic, too. So the turnover -- and the turnover has been EUR 2,000 million, which has represented 17.1%. That's the turnover.

And the national market, the domestic market, we have continued building infrastructures for electric energy and with the building of renewable farms and power. So Chile, Brazil, Australia, where we've had bigger businesses, what we reached in 2025 compared -- like, for example, the power transmission lines that has meant EUR 270 million in sales and another combined cycle project in Brazil, and it represented EUR 300 million for the group.

And as for the rest of the projects that we are doing in the segment substations, transmission lines in Angola, Senegal in the United Kingdom and Ireland, photovoltaic parks in the Dominican Republic, among many other projects. So we've reached EUR 133 million in International and the margin is 6.8%. We have observed a better performance in the last part of the year. For those of you who follow us regularly, the margin that we were informing was around 6% for this business segment. So we were above that 6%, and we are at 6.8%.

A very clear goal at Elecnor is to drive margins of activities, especially in the Projects segment. The Project segment has to give us a greater margin compared to the Services segment. And these figures evidence that. So we reached attributed consolidated net profit of nearly EUR 40 million. So we covered -- we've hedged all the risks that we have been identified. And this is part of the policy that we have of the group to have a conservative approach to the consolidation of results, and this won't change and it hasn't changed.

Let's move on to the Concessions segments. I mentioned before that figures with which Celeo provides. Sales, EBITDA and results, it's -- sometimes we cannot -- we don't get to see the potential of the value that Elecnor has in this activity segment. I would like to just remind you that together with [ APG ] owns 51% of the Celeo. And the book value is EUR 550 million. And allow me to talk about one of the topics that we shared in September.

The reasonable value of the Celeo Group under the equity method exceeds EUR 500 million. And the Celeo Group manages through its vehicle companies, nearly 8,000 kilometers of transmission lines in Brazil, Chile and in Peru. 350 megawatts of renewable energy in Spain and in Brazil. In Spain, through 150 megawatts of solar panels and 220 megawatts of PV. These, the latter happened in Brazil.

So if we take the figures of the Celeo, the books of the Celeo Group, we see there on the slide -- on the table on the slide that the turnover is close to EUR 300 million with an EBITDA of EUR 200 million and earnings of EUR 32 million. So this represents for the Elecnor Group EUR 16.1 million, which represents a 32% more. This would be the EBITDA part. And this is not included in the balance in the results, and that's important to mention.

And we also wanted to show you this, the EBITDA attributable to Celeo with regards to the projects that they manage, it corresponds to EUR 214 million and using the equity method. This is -- it just give us a reference of the enormous potential of cash flow generation by Celeo and which represents the value that we have in Celeo, and I was referring to earlier on. This capacity to generate cash flow in a jointly manner comes mainly from transmission in Brazil, which represents 44% transmission in Chile, accounts for 30.5%. And there, we see renewables. Spain, which account for 1/4 of the EBITDA attributable to Celeo. And this is related to projects that are already ongoing and are being operated.

So apart from -- through the Celeo Group, Elecnor, which is one of another strategic target. It's committed to allocate, as we said in our strategic plan, more than EUR 400 million. And it's a very ambitious goal, and we are making steps -- prudent steps to reach this goal. And in this slide, we can see the expense that we are putting on to the profit and loss account, and it shows this investment effort. And we are seeing the first results.

And in 2026, we will start to build some of the projects where we are at the end of the development stage, and we are going to make this happen. We are working a lot in looking for new investment opportunities through Celeo or through other investment platforms. The idea is to look for high-yield opportunities and one-off opportunities, both in the domestic field as well as in the international field.

Let's look at the main key figures. We have looked at it by segments and how these translate into the consolidated financial statements. So EUR 4.4 billion in sales, net turnover, consolidated EBITDA of EUR 268 million and total net profit attributed to the parent company of EUR 110.7 million. And if we compare it to 2024, and you can see on this slide, is very much impacted by the sale in 2024.

Another thing that we would like to mention, and it's a very good indicator for 2025. In 2025, we have generated pretax cash flow of EUR 364.2 million. This is excellent in our opinion, a very good indicator of the quality of the performance that we are actually acknowledging here. Over 2025, the group recovered the payment on account of corporate income tax on the sale of Enerfin shares paid in the previous year in excess of the final assessment.

So the cash flow influence is related to these. This is a net collection of about EUR 104 million and as a result of the acquisition of the property plant and equipment and the incorporation of the new companies. And we -- as we -- as I say, we have made a net investment effort of EUR 104 million, mainly as a result of the acquisition of property, plant and equipment. And we made investments in new companies in order to have more presence in certain parts of the activity.

As for the financing activities, the negative net cash flow is EUR 249.4 million, which mainly reflects the cash outflow for shareholder remuneration in the form of dividend payments. This EUR 273 million, EUR 265 million were related to the 2024 results up until we had EUR 805 million. So the outflow was EUR 265 million and plus the payment on account that was carried out at the end of last year.

With regards to the financial position and the balance of the company, the net financial position with recourse ended the year at EUR 199 million after having made the payment of dividends related to the surplus of selling Enerfin. So we ended up with EUR 199 million.

So this allows us to approach all our commitments when making investments as well as sharing the cash flow generation with our shareholders. The balance structure and year end is very balanced with asset of more than EUR 990 million -- with the net financial position recourse at EUR 199 million. And how about the performance in the stock market for Elecnor Group. Throughout this session, we have talked about certain figures. But I would like to talk about the performance of the dividends over the past years.

If we take away of this analysis, the uniqueness of what happened in 2024, we come from financial years where we've been sharing up to 36% of the consolidated financial statements. For 2025, if it's approved by the shareholders' meeting, we will go up to 12% more compared to 2023. We will distribute 44%. And we've done that by improving the payout from 36% to 44%. So this is within a financial context. Cash flow generation, financial assets of the group. It will back the commitment of distributing more than EUR 220 million between 2025 and 2027.

And with regards to the evolution of the share price in 2025, we believe that it's been an excellent year. How we account for our activity has driven to get to know -- so that people know the company better both for the Services sector as the Project segment and as well as the value that we have in the Celeo, and we will keep on making efforts to provide all the information so the shareholders can invest.

With regards to the share price performance in 2025, we started off with a closing share price of EUR 24.5 and we will be around -- well, you probably have this information right now, we have the total cash traded was EUR 744.1 million, which are significantly higher than what we saw in 2024. So therefore, the liquidity in the company has improved significantly. The market capitalization at the end of 2025 was more than EUR 2,100 million, and we are capitalizing at EUR 2,400. This shows the excellent performance of these figures for the company.

And with regards to the shareholder structure and the treasury stock, the pie shows is stable structure. Cantiles holds 53% of the shares and the rest is also stable and which is similar to previous financial years, as we can see in the pie chart. With regards to the forecast in 2026, there are specific macro trends like energy transition and the electrification of the economy, urbanization and digitalization of the society and environmental and social sustainability.

We reaffirm our profitability and cash generation objectives contemplated in the 2025 and 2027 strategic plan. And our aim was to be exceeding the goal in sales, and we have exceeded. And the idea is to continue being exceeding the EUR 100 million in net profit in 2025. And we talked about generating EUR 350 million in cash flow in the 2025-2027 strategic plan. And I think we're on the right track. We've had an excellent year with regards to cash flow generation.

With regards to our ESG commitments, we are focused on people. There are more than 28,000 employees. And the main objective is that people go back to their homes safely. We are driving improvement of -- we're trying to improve the accident rates. We are improving and increasing all the health and safety measures. And that's one of the key cornerstones. We believe in the promotion of equality and opportunities for all.

And on top of that, we are committed to the environment. 81% of our turnover is certified by ISO 14001, environmental management systems. And we work on biodiversity management and environmental protection in all projects. We want to include this aspect, which is critical for a group to develop these projects. And then in terms of compliance, we believe in responsible management.

We have a compliance system, which is aligned with the highest international standards. Not only Elecnor, but the entire supply chain needs to be aligned with the group's sustainability standards. And we believe in an ethical and responsible management of the entire group value chain. And apart from this, you will find annexes of all the projects and all the figures that we've shown.

And now we are open for questions. Any questions that you wanted to ask. So far, we haven't received any questions. So I think everything was very clear. As we always say any question, all channels are open to take on any questions that you may have.

We would like to thank you for your interest that you follow our company. And I would like to thank you for your participation, and we invite you for the following results presentation.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

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