WeBuild SpA (IMPJY) Q2 2024 Earnings Call Highlights: Record Backlog and Strong Financial ...
New Orders: Over EUR7.5 billion worth of new orders won in the first half of 2024.
Backlog: Record backlog of EUR65 billion, with EUR56 billion related to construction projects.
Revenue: Increased by 20% to EUR5.5 billion.
EBITDA: Grew by 41% to EUR407 million, with a margin of 7.5%.
Net Income: EUR82 million, three times the amount registered in the first half of the previous year.
Net Cash Position: EUR1.4 billion, positive for the fourth consecutive semester.
Gross Leverage: Below 3 times, specifically at 2.8 times as of June 2024.
Revenue Distribution: 35% from Italy, 24% from Australia, 13% from North America, 9% from Europe, and 9% from the Middle East.
Net Financial Costs: Decreased by EUR21 million, with financial income at EUR81 million.
Liquidity Position: Over EUR4 billion, including EUR970 million of undrawn RCF lines.
Order Intake Guidance: Book-to-bill ratio exceeding one expected for 2024.
Revenue Guidance: Expected to surpass EUR11 billion for 2024.
EBITDA Guidance: Expected to exceed EUR900 million for 2024.
Net Cash Position Guidance: Targeted at more than EUR400 million for 2024.
Release Date: July 26, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
WeBuild SpA (IMPJY) achieved a record backlog of EUR 65 billion, with EUR 56 billion related to construction projects, fully covering 2023-2025 revenue and EBITDA targets.
The company reported a 20% increase in revenues to EUR 5.5 billion and a 41% increase in EBITDA to EUR 407 million for the first half of 2024.
Net income tripled compared to the first half of the previous year, reaching EUR 82 million.
WeBuild SpA (IMPJY) maintained a strong net cash position of EUR 1.4 billion, marking the fourth consecutive semester of positive net cash.
The company is a global leader in the water infrastructure sector and ranks among the top 10 players in sustainable mobility infrastructure, with a strong focus on innovation and safety.
Negative Points
The company faces challenges from global economic headwinds, including inflation and geopolitical tensions, which could impact future performance.
Despite strong financial results, the gross debt remains a concern for investors, with a target to reduce it by EUR 200-250 million by 2025.
There is a need for significant hiring, with plans to recruit 36,000 people by 2026, which could strain resources and impact operational efficiency.
The company is dealing with past project losses, particularly in the US market, which have affected profitability.
WeBuild SpA (IMPJY) is navigating a complex market environment with evolving customer demands and competitive pressures, requiring continuous adaptation and strategic focus.
Q & A Highlights
Q: Can you provide insights on the evolution of net working capital in the second half and the profitability of the Australian and US markets? A: We expect continued improvement in net working capital, with a balance between new advance payments and repayments. In terms of profitability, Australia is a major contributor, and we anticipate a better business mix in the second half, with significant projects in the Middle East and Italy. The US market is on track to reach breakeven at the EBITDA level by year-end. - Pietro Salini, CEO and Massimo Ferrari, General Manager Corporate and Finance
Q: How do you plan to manage the gross debt, and what are your expectations for CapEx? A: We aim to reduce gross debt by EUR250 million by 2025. Our CapEx for the first half was EUR360 million, and we expect around EUR390-400 million in the second half. We are optimizing our debt management and expect to maintain control over interest costs. - Massimo Ferrari, General Manager Corporate and Finance
Q: Are there any major contract renegotiations this year, and what is driving the high level of liquidity? A: We are not renegotiating major contracts currently. The high liquidity is primarily due to successful bidding and commercial activities, along with cash from renegotiated projects in 2023. - Massimo Ferrari, General Manager Corporate and Finance
Q: Can you provide details on the water treatment business and its future prospects? A: Fisia, our water treatment subsidiary, has a backlog of EUR600 million and is expected to generate EUR230 million in revenues this year. We plan to expand its role from an EPC contractor to an investor and operator, leveraging its expertise in new markets like Italy. - Pietro Salini, CEO and Massimo Ferrari, General Manager Corporate and Finance
Q: What is your outlook on the order pipeline and potential for new contracts in the second half? A: We are confident in our order pipeline, which does not yet include significant projects like the Messina Bridge. We expect to exceed our order intake guidance for the year, with a strong focus on sustainable growth and careful client selection. - Pietro Salini, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.