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Edited Transcript of SAL.MI earnings conference call or presentation 12-Mar-20 8:00am GMT

Full Year 2019 Salini Impregilo SpA Earnings Call

SESTO S. GIOVANNI Apr 8, 2020 (Thomson StreetEvents) -- Edited Transcript of Salini Impregilo SpA earnings conference call or presentation Thursday, March 12, 2020 at 8:00:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Massimo Ferrari

Salini Impregilo S.p.A. - General Manager of Group Finance & Corporate

* Pietro Salini

Salini Impregilo S.p.A. - CEO & Director

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Conference Call Participants

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* Alessandro Tortora

Mediobanca - Banca di Credito Finanziario S.p.A., Research Division - Research Analyst

* Emanuele Gallazzi

Equita SIM S.p.A., Research Division - Research Analyst

* Jamie McFarlane

Bybrook Capital LLP - Partner & Senior Analyst

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Presentation

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Operator [1]

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Good morning. This is the Chorus Call conference operator. Welcome, and thank you for joining the Salini Impregilo Full Year 2019 Financial Results Conference call. (Operator Instructions) At this time, I would like to turn the conference over to Mr. Pietro Salini, Chief Executive Officer of Salini Impregilo. Please go ahead, sir.

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Pietro Salini, Salini Impregilo S.p.A. - CEO & Director [2]

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Good morning, everyone, and welcome to our conference call dedicated to Salini Impregilo's '19 full year results. I'm the Chief Executive of the group, and I will give you a few words about our performance last year as well as our plans for the future before letting Massimo Ferrari, CFO of the group, to go through into further details.

'19 was a busy year for us, it marked the start of our company's transformation to grow in a more sustainable way. We launched Progetto Italia, a plan to consolidate the construction sector in Italy at a time when many companies have fallen on harder times. We have acquired several of them, including Cossi Costruzioni. Our aim is to create a group with the scale, resources and expertise to do 2 things: help revive infrastructure development in Italy; and compete abroad from a position of greater strength.

Among the companies in difficulties is Astaldi. As the second biggest construction company in Italy after Salini Impregilo, it is the one that would make the biggest contribution to our plan to create a larger group with the best of Italian engineering. We are still in the process of acquiring it.

Although they are still in the final votes from creditors that must be held in the 26th of March, we are confident that the acquisition will proceed as planned. This complex operation has already seen us gain the backing of Italy biggest bank as well Cassa Depositi e Prestiti, the state investment fund.

We have conducted a capital increase of EUR 600 million, invited new shareholders into our capital base, changed our governance, alter the composition of our Board and choosing a new name for the new group, the name will be WeBuild. All of these had obviously not distracted us from the incredible work that we did last year. We completed on time Cityringen. The metro line will make a big contribution to Copenhagen's ambition to become the first carbon-neutral capital in the world.

In Australia, we won the contract to build Snowy 2.0, the biggest hydroelectric project in the country's history, as it seeks to produce more renewable energy. In Texas, we are in the early stages of the civil works for the first true high-speed railway in the United States. The train service between Dallas and Texas will not (sic -- not only) make travel between 2 cities easier and faster but also help reduce CO2 emissions.

Moving to the next slide. We have nearly EUR 8 billion worth of new orders, a record. The countries where these orders came from show how we are succeeding in our strategy to focus on markets with low-risk profiles. These countries include Australia, Europe and the United States. They have come to represent more than 80% of the value of our orders backlog. We are working towards a number of the United Nations' Sustainable Development Goals. The projects that support these goals have come to represent more than 85% of our revenues from contracts with customers and backlog orders.

As we have worked to deliver our projects, we managed to reduce by an estimate 25% our own CO2 emissions compared with 2018. In acknowledgment to our dedication to sustainable development, our group rating grew from B to A- in 2019 Carbon Disclosure Project. It puts us amongst the leaders in the corporate world in the fight amongst -- against climate change.

Meanwhile, on the financial side, revenues and margin were in line with our expectation. We improved the operating free cash flow by more than EUR 300 million compared to previous year, and we reduced our gross and net debt.

Let us now move to Slide 5 to look at our new orders in detail. As I said earlier, we received more than EUR 8 billion worth of new orders. That's a true record. The amount saw us achieve a book-to-bill of 1.66x, and more than 90% of the orders are related to projects that contribute to the so-called ESG goals. These orders reflect our derisking strategy. More than EUR 6 billion or 75% of the total value of the orders are located in countries with low-risk profiles.

In addition to the countries that I've already mentioned to you, like Australia, there are those that are new to us. We entered Norway for the first time with the signing of a contract to build a section of the railway south of Oslo. We also returned to Canada after 3 decades of absence to win the Hurontario Light train contract just outside of Toronto. It is the first time that we win a contract with Astaldi since announcing Progetto Italia.

In the United States, our single biggest market by revenue, we signed an agreement to join the mega project to build a high-speed rail train in Texas, from Dallas to Houston. The total value of the project is expected to be about $20 billion, $15 billion of which for the civil works with a contract to us. Our contract include the design and construction of the viaduct, embankment sections, track system and maintenance buildings.

On Slide 6, you will see how projects that support sustainable goals have come to make up a big part in the revenue from progress with customers and order backlog, more than 85%. Looking at revenues, the United States remain our single biggest market responsible for more than 20% of the total of the year.

We also started generating more revenue from Italy. In June, the client notified the COCIV consortium, which is the Genoa-Milano, that the sixth and final lot for the project had been activated. This will add some EUR 528 million to the EUR 3.8 billion of financing activity already underway. We can attribute to this the so-called Sblocca Cantieri Decree issued by the government to unblock projects across the country.

You will see from the chart that more than half of the revenue received last year came from low-carbon project, such as the construction of the metro lines and railways, what we call sustainable mobility. Projects like the M4 metro line in Milano and the high-speed rail line being built between Naples and Bari. At the end, our construction backlog stood at EUR 29.5 billion, plus 11%, with more and more then project coming from low-risk countries, as explained earlier.

Slide 7 shows the opportunity that we have identified in every continent. Although there are opportunities everywhere, you will see from the light blue columns that we are focusing on regions that have relatively fewer risk. That means Australia, Europe, North America and taking advantage of right opportunities in Middle East. If you include Canada and the Nordics, these regions make up more than 90% of our commercial pipeline.

Starting with a selected market for the period between 2020 to 2022, we calculated the total value of potential project at about EUR 580 billion. We then estimated that EUR 120 billion of that total was our core addressable commercial activity. The potential project in this part of the market were identified according to criteria that include country, client availability, knowledge of local suppliers, partners, contractual term and so forth.

When it comes to bidding for projects, we are focusing on those that are in line with the group strategy. We conduct a 360-degree analysis of each project, reviewing, for example, the technical and economic risk before deciding which one to bid on. On the short term, we are waiting for the outcome of tenders valued at more than EUR 7.6 billion. Of the total, EUR 800 million had already been awarded or selected as best offer. The others are either still being prepared or in the prequalification stage.

In Slide 8, we will give you clearly the idea of the state of play in Italy. There have been encouraging signs from the government in its decide to unblock projects that have been stalled for years. I'm referring to the Sblocca Cantieri Decree approved in June. There is also a move on the government part to invest more in the infrastructure to revive the economy.

And the success that we have had in building the bridge in Genoa has made the government want to apply the same so-called fast-track model to other projects. The fact that the state fund, Cassa Depositi e Prestiti, has became a shareholder in our company as part of Progetto Italia shows how much importance that the government is giving to the role of infrastructure in helping to revive Italy's GDP.

In Genoa, our workers are on site 24 hours a day, 7 days a week. It is a construction site that never stopped, not even for weekends and holidays. Many activities are being done in parallel on the construction site to get the bridge ready as soon as possible. We are doing all of these things in close collaboration with the Mayor of Genoa, who is also the special commissioner overseeing the project. This is a perfect example of how the client and the contractor work together to achieve the best result in the community.

In Milan, construction of the M4 metro line is going well. Last year, we joined all party to sign an agreement to resolve some outstanding issues and ensure the financial and economic stability of the project. New credit line for EUR 400 million were also opened. Therefore, it is one of the most important projects of sustainable mobility in Europe. It will link the Linate city airport with the historic center in only 12 minutes' time. The first section of the line between the airport and the Forlanini train station will open for service next year.

I will now let our General Manager, Corporate and Finance, Massimo Ferrari, take you through the details of our full year results.

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Massimo Ferrari, Salini Impregilo S.p.A. - General Manager of Group Finance & Corporate [3]

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Thank you, Pietro. Good morning, everybody. Before going through the numbers, let me explain that, as you can see on Slide 10, we have the adjusted figures that we put also in the press release yesterday that include the effects from work under management, which are Lane's JVs. They are also adjusted for the impact of Venezuela impairment, both for 2018 and 2019. In addition, for better comparison, the 2018 results have been adjusted to the IFRS 16. So the figures are homogeneous and includes also the effect from the leasing accounting coming from IFRS 16.

So let's now go into further detail by starting with the top line and margin performance. Revenues amounted to EUR 5.3 billion, approximately in line with those of 2018. The main contribution to the revenues from -- for the period comes from some major projects, including those of the Lane Group, the works of the high-speed, high-capacity railway between Milano and Genoa, the orders active in Ethiopia, works in Saudi Arabia, such as the design and construction of the Riyadh metro line as well as the construction of Rogun dam in Tajikistan.

EBITDA was about EUR 423 million, in line with those of 2018. EBITDA in 2018 was impacted by nonrecurring write-off related -- sorry, EBITDA of 2019, this year, was impacted by nonrecurring write-off related to Lane's involvement in the I-4 Ultimate project for EUR 92 million in Florida, which I will explain more in detail later.

EBIT was about EUR 184 million in addition to the impact of write-off on I-4. EBIT was -- also impacted the write-down of some receivables for some EUR 46 million from an Italian partner, Condotte, that you know is under a liquidation procedure. EBITDA and EBIT margins were 7.9% and 3.4%. Net of the nonrecurring negative write-offs I mentioned above, EBITDA and EBIT margins would have stand at, respectively, 9.7% and 6%.

This margin improvement is mainly the result of 2 factors that we discussed with many of you during the road show, the equity road show: better operating performance related in particular to the recovery and full consolidation of COCIV; the Milano-Genoa high-speed, high capacity railway; by reducing to minimum the quote of the insolvent Italian partner, Condotte; the rationalization of overhead costs, both at Lane and Salini Impregilo, with a lower incidence of revenues of around 0.3%.

On Slide 11, we can see in detail the improvements at Lane. Since the acquisition in 2015, Lane has had strong commercial performance. Its backlog has increased by a compound annual growth rate of 17%. And as discussed before by Pietro, one of the most important projects that Lane was awarded was the high-speed railway to be built between Houston and Dallas, with a 50% share in JV with Salini Impregilo.

Lane adjusted revenue grew by 23% to stand at EUR 1.2 billion. During 2019, the JVs that manage the I-4 project, where Lane has a 30% stake, experienced negative results. The results were due to an increase in cost caused by client mismanagement. The JV signed the settlement agreement with the client for about $125 million, and it's preparing some claim against the client.

Since the settlement agreement covers part of the extra costs incurred, Lane registered for conservative purpose a loss of EUR 92 million. It will not have any further effect in terms of cash and financial in the coming months.

When excluding this, EBIT is near to breakeven, thanks to overhead rationalization for about EUR 48 million as well as a focus on more profitable projects. The 3% EBIT target for the midterm is confirmed, and probably it will be achieved in advance.

At the strategic level, Lane has adopted a new business model with 3 priorities: efficiency, effectiveness and accountability. Lane is interested in projects with very high budgets, generally higher than $100 million. It will focus on road and railways in core markets like California and New York metro area. It will also look at opportunities in water and tunneling. As for projects in general, Lane is looking at tenders that it can either do alone or in JV with peers and of course, with Salini Impregilo.

On Slide 12, you can see the group profit and the loss below the EBIT line. The financial charges stand at EUR 147 million, in line with the 2018 figures. They include EUR 14 million from a one-off tax settlement with Ethiopian authorities.

And as you know, the repayment of the 2018 bond that expired in August generated full year saving of more than EUR 10 million partly offset by higher banking interest cost of EUR 8 million. There was a positive impact from exchange rates for some single-digit million euro compared to EUR 13 million for the prior year. The impact is mainly related to the performance of the Ethiopian currency against the dollar and euro.

Earnings before taxes amounted to EUR 92 million compared to EUR 129 million. Income taxes reflect extraordinary taxes charged from the Ethiopian settlement for EUR 19 million. And the net result attributable to the parent company amounted to EUR 40 million compared to EUR 178 million in 2018, which was positively impacted by the gain from the Plants & Paving disposal in Lane.

Excluding the effect of the Ethiopian tax settlement and other net effect I already mentioned early at EBIT level, the net results would have been some EUR 65 million considering a figurative tax rate of 39%.

Turning to Slide 13 on cash flow. You can see how operating free cash flow before dividends and extraordinary items improved in comparison with 2018 by EUR 311 million (sic - EUR 310 million), reaching some EUR 21 million. This was thanks to better operating results by EUR 108 million, significantly less cash absorption from net working capital of EUR 248 million.

In 2019, we faced nonrecurring cash out for about EUR 235 million, which included a second and the last tranche of the Panama repayment for EUR 135 million, Ethiopian tax settlement, taxes on disposal of Plants & Paving for EUR 57 million and Progetto Italia with a one-off cost for around EUR 10 million (sic - EUR 9 million).

In 2019, we experienced a shift of payments mainly related to Italian operations coming from litigation and some payments on the high-speed train for some EUR 237 million. In case of no delay, the operating free cash flow before dividend and extraordinary items would stand at EUR 258 million. Without forgetting revenue growth, our focus for the coming year will be on cash generation, and I believe the result coming from operating free cash flow is a good step in that direction.

Turning to Slide 14. You can see the evolution of gross and net debt. For comparative reasons, as I mentioned before, they are homogeneous in terms of IFRS 16. Excluding EUR 85 million coming from our subsidiary, Beyond, for interim financing of Astaldi, gross debt amounted to EUR 2.19 billion, with an improvement of about EUR 235 million compared to EUR 2.4 billion at the end of 2018.

The net financial position was EUR 0.6 billion, with an improvement of around EUR 307 million. As you can see in the graph on the lower part of the slide, the net financial position, excluding the extraordinary cash-outs and including the potential -- in the potential cash-in which were delayed, would stand at EUR 152 million.

Lastly, on Slide 15, you see the maturities of our corporate debt exposed as pro forma reflecting a new bond -- the new bond issues in January 2020. The total amount of new bond issues -- issue was EUR 250 million, of which EUR 127 million were exchanged with 2021 notes.

In executing the Progetto Italia agreement, a EUR 268 million credit line has been extended and a new revolving credit facility for EUR 200 million has been obtained there, reaching a total amount of RCF's line of EUR 550 million that give to the group a significant elasticity in terms of cash management and financial position managing. Thanks to these operations, we were able to extend our corporate debt duration and secure more than 70% of these at fixed rates. Pro forma average cost of debt stands at an outstanding 2.6%.

I will now leave to Pietro the floor to conclude with some final remarks.

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Pietro Salini, Salini Impregilo S.p.A. - CEO & Director [4]

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Thank you, Massimo. I will summarize the key messages that we want to give you today. On Slide 17, Salini Impregilo received a record amount of new orders in terms of value in 2019, and it has applied a disciplined approach to identify business opportunity in markets with low-risk profiles.

The risks we have faced in the past such as those related to the second Panama Canal are behind us. We've kept a solid financial profile. In the next couple of years, the opportunity remain in such a huge global market. In Italy, things are turning to the better as the government is making infrastructure a priority.

Progetto Italia promises to be a game changer. With the support of our shareholders, we will create a group with scale, resources and expertise to compete more efficiently and effectivity anywhere in the world. Astaldi is a major component of this strategy, and we are optimistic about the successful completion of our acquisition in the company this year.

Slide 18 describes the main guidelines of our business plan, which will be presented during 2020. Progetto Italia will lead to the birth of WeBuild, which will bring Salini Impregilo, Astaldi and other smaller player into one big group. WeBuild will have scale, will be more efficient, manage a less volatile portfolio and have a more flexible and solid financial position. The expertise and resources that the group will have will make it more competitive in bidding for projects anywhere in the world.

We keep expanding in markets that have potential for the group such Australia, Europe and Middle East and North America. Our focus will be on projects that support sustainable development, hydroelectric dams, metro lines and railways to name a few. These are complex public works that offer higher return on sales.

We are also working on complementary businesses that can stabilize cash flows. Of course, any contract we bid for will go through our strict selection process and risk management. We are continuing our efficiency drive by centralizing many functions, such as the finance and procurement, that will make our cost structure leaner and more effective.

Looking at 2020 and the same perimeter as of today, we expect to continue our path of growth in terms of order acquisition, reaching a book-to-bill of approximately 1.1x. Revenue is projected to grow at a high single-digit rate, and EBITDA margin expected to range to 7% to 7.5%. We are confident to reach a margin closer to 7.5%. This forecast reflects the group's current business perimeter. Further update will be provided during the presentation of the business plan.

The forecast also do not include the impact that the COVID-19 virus may have on business dynamics. The group, in compliance with the government measures and giving maximum protection to the health of the stakeholder and our employees, has undertaken to guarantee, where possible, the operational continuity of construction site in Italy and abroad.

Thank you all for your attention. We can now have some question and answer.

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Questions and Answers

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Operator [1]

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(Operator Instructions) The first question is from Emanuele Gallazzi of Equita.

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Emanuele Gallazzi, Equita SIM S.p.A., Research Division - Research Analyst [2]

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Yes. I have 3 questions. Well, the first one is on the EBITDA margin. You reported for Salini Impregilo margin of 10.4%. And during the call, you mentioned the positive effect from Condotte. I was wondering if you can clarify it.

And the second one is on the guidance. You basically gave a guidance of high single-digit growth at top line level. I just would like to understand your assumption behind this guidance.

And the last one is on Lane. EBIT was still negative in 2019. So can you share with us your expectation for 2020, if you should see the breakeven?

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Massimo Ferrari, Salini Impregilo S.p.A. - General Manager of Group Finance & Corporate [3]

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Sorry, Emanuele, can you repeat the last question? We did not get that one.

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Emanuele Gallazzi, Equita SIM S.p.A., Research Division - Research Analyst [4]

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Yes. That will be on Lane and on EBIT, which was still negative in 2019. I was wondering if you expect a breakeven at least in 2020.

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Massimo Ferrari, Salini Impregilo S.p.A. - General Manager of Group Finance & Corporate [5]

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Okay. Thank you, Emanuele. We can start with the EBITDA margin. We mentioned 2 different effect, positive effect coming from the COCIV consortium. First of all, the restart of the full operational activity from the Progetto. And then we get also the percentage in terms of marginality, EBITDA margin coming from the partner that is under a procedure, as you know, Condotte.

This is according the law and according the contract. They were not able to comply with the contract in '18 and '19. So we get also the 30% of the stake coming from Condotte. For conservative purpose, we also put a fund risk for the credit that we have towards Condotte. So the net effect is a positive effect in terms of EBITDA.

Then can skip the second question and going to the last one, Lane, we expect 2020, it will be at breakeven and hopefully on a positive territory. And regarding the guidance, we gave just some figures, some target because we are preparing and we are very close to disclose the business plan. But of course, we have to take in consideration that the COVID-19 extraordinary situation for -- not only for Italy but for the world.

At the moment, as Pietro mentioned before, we have all the job sites that are working, mainly the Genoa one, but also the M4, the metro line Milan, but we cannot rule out some short-term effect in terms of slowdown for production.

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Emanuele Gallazzi, Equita SIM S.p.A., Research Division - Research Analyst [6]

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Okay. If I can just very quick follow-up. On the net financial position, you mentioned this delay in cash-in from the Italian operation for EUR 236 million. I just want to understand when do you expect to cash-in these receivable claims.

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Massimo Ferrari, Salini Impregilo S.p.A. - General Manager of Group Finance & Corporate [7]

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In 2020, some cash-in already happened and some other are expected in the coming weeks or months.

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Operator [8]

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The next question is from Jamie McFarlane of Bybrook Capital.

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Jamie McFarlane, Bybrook Capital LLP - Partner & Senior Analyst [9]

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I've got a couple of questions. The first one is, how has the cash flow been year-to-date to start 2019? What are the cash impacts that you're expecting in H1 from the COVID situation?

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Pietro Salini, Salini Impregilo S.p.A. - CEO & Director [10]

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Well, thank you for the question. For the moment, we do not expect any slowdown in cashing in from the COVID situation. It depends, of course, how long it would stay and what measures the government and the different government will take on the job site. This will have some effect. Of course, if these things continue for a number of months, we will have some slowdown.

We are anticyclic because, as you may understand, construction site in contrast do not have the effect on short term by this situation, unless they forbid us to work which is a different thing. But this is not a situation now. So we do not expect, from that point of view, any particular impact.

Of course, the fact that not being able for this time to be physically present in meetings, cannot go freely from one part to the others, cannot move, the supply chain will resist for a certain number of weeks. But if all job site or if all industry will have a problem, then this will be a general problem not related to us in a way. So I don't see a particular thing happening to us and not to the others, this is what.

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Jamie McFarlane, Bybrook Capital LLP - Partner & Senior Analyst [11]

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Right. And just what is your guidance for the H1 cash flow excluding the purchase of Astaldi?

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Pietro Salini, Salini Impregilo S.p.A. - CEO & Director [12]

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No. These figures will be given together with the budget and business plan that we are submitting to the Board in the coming weeks.

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Massimo Ferrari, Salini Impregilo S.p.A. - General Manager of Group Finance & Corporate [13]

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And Jamie, we expect to have the creditors' vote at the end of March, as you know. But the capital increase from Salini Impregilo into Astaldi, it will happen across the summer, probably on September. So we will not have the cash-out for the capital increase in the first half related to Astaldi.

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Jamie McFarlane, Bybrook Capital LLP - Partner & Senior Analyst [14]

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Right. And then just what's the -- what's your cash at the holdco in Italy? I know you provide the -- in the accounts, you provide the consolidated cash and other financial assets, but it's normally (multiple speakers) a number. What was it as of the 31st of December in Italy?

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Massimo Ferrari, Salini Impregilo S.p.A. - General Manager of Group Finance & Corporate [15]

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As you know, when we publish the full year results, we have the breakdown in terms of debt and liquidity location. I can confirm you that more than EUR 1 billion of cash that we had at the end of 2019 are well spread across the different countries and continents. It's very close to the operation.

We have a lot of cash in the U.S., quite the same amount in the Middle East and Australia. So we have, on average, EUR 180 million, EUR 200 million in the main 4, 5 countries out of Italy. We have a small amount of cash in Italy, also because we manage the cash pooling, not using the Italian accounts.

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Jamie McFarlane, Bybrook Capital LLP - Partner & Senior Analyst [16]

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Right. And so given the amount of the capital increase you burned in H2 last year and the fact that H1 is normally a cash burning half, it looks like you're probably not going to be able to pay for the Astaldi capital increase or you're going to have to draw down significantly on the RCF.

I mean I'm just very surprised because the guidance you gave at -- in June and then on the equity road show was that the H2 was going to be a cash-generative half. And you've actually burned half the capital increase already. So I mean it sounds like it's probably -- you may not actually even have the capital to acquire Astaldi at this point.

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Massimo Ferrari, Salini Impregilo S.p.A. - General Manager of Group Finance & Corporate [17]

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No, no. We still have the full amount that we get from the capital increase. From a net financial position perspective, as we mentioned before, we had some shift of payment that, of course, were not expected until the end of the year. The last days of the -- in December are always very tough for us because we are getting money from clients and each receivable is huge. So some year, we can succeed, some other we can have some shift.

We still have the cash coming from the capital increase. We reduced a lot short-term lines and hot money. As we mentioned before, we increased significantly the long-term part of our corporate debt that you have to remind that our -- that includes also the leasing. So we have EUR 100 million more of debt that come from IFRS 16. So in the long-term part, we are improving our gross debt figures.

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Jamie McFarlane, Bybrook Capital LLP - Partner & Senior Analyst [18]

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Right. But I think isn't the point that you're still not collecting, you said H2 was going to be generative. And I think the best comparison here is, one of your peers, CMC, only a year ago, said the receivables, we're just going to collect them in a month's time and 2 months' time. And then within 3 months, it was in concordato, and the bonds were trading at EUR 0.05.

So it feels like this capital increase has already disappeared. And given COVID, are you raising any additional emergency capital? Because given where the stock is, given cash flow issues, it feels like there's going to be another bankruptcy in the Italian construction space.

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Pietro Salini, Salini Impregilo S.p.A. - CEO & Director [19]

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No, but I think there is some misunderstanding. When you see -- when you say there will be shift in terms of cashing in of some items from Italy at EUR 235 million, we do not say that this -- the amount had disappeared.

We said that, for instance, we have the judgment made and there was a transaction that has to be approved by the very lengthy procedure from the authority, anti-corruption authority here, which has taken more than expected. But this is an executive order by the judge, so we can seize the money if we do not want to make the transaction for these things.

And the same things happen to the high velocity train, there is a closing of recognition by the client of some past items that has to be cashed. And they are going through this procedure. We expect this amount, that were expected before the end of the year, to be cashed in into the next coming weeks. This is what is it. So these things that you put forward, the fact that the amount has been burned, I don't think is the right --.

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Jamie McFarlane, Bybrook Capital LLP - Partner & Senior Analyst [20]

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I think people should just have a look at your cash burn over the last 4 years. You've burned over EUR 2 billion of cash. I mean, there's -- I mean, there is no denying it. You can look at the facts.

And every half, you promise that you're going to collect in the next half. You said, clearly -- we can go back to the H1 call -- that H2 was going to be cash generative, and it wasn't. You've burned half of the capital increase already. So I mean, I don't know. Like how are you (multiple speakers) to have any?

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Pietro Salini, Salini Impregilo S.p.A. - CEO & Director [21]

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I think that you have -- of course, you have a bias and you have your ideas, I cannot change them and probably you are not one of our investors. But in another way, what I say, we had a number of problems coming from the past from the acquisition. As you have seen, all the write-off are related to matters that came with the amalgamation of Salini to Impregilo and coming from the past.

There has been no write-off from the current operation or from contracts that had been awarded during this management and these 5 years. Everything that has been written-off is related to the past. So what you're mentioning is the fact that if we have to pay for something that happened in the past, yes, probably, we have to manage for that. We did.

But at the same time, we did manage to make all what is needed to recover this amount into the -- it will take time. As I said, for Panama, for instance, it's not an easy job. It's a very lengthy and complex litigation. We had to pay upfront EUR 600 million only for Panama. So maybe you're referring to those things. The fact that some clients delay a couple of months of paying EUR 300 million, I can say, it's not the best thing that can happen, but it happens. So maybe this explains your view. I don't know what's --.

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Jamie McFarlane, Bybrook Capital LLP - Partner & Senior Analyst [22]

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I mean it's pretty bad if there's -- if you've got EUR 300 million of delays here and there and you've just raised EUR 600 million of capital based on the fact that H2 is going to be cash generative. I think you should give guidance (multiple speakers).

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Pietro Salini, Salini Impregilo S.p.A. - CEO & Director [23]

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Yes, but this is not correct.

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Jamie McFarlane, Bybrook Capital LLP - Partner & Senior Analyst [24]

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You should give guidance for H1 2020. Because given you're supposed to collect all of this cash that was delayed, should I presume that H1 2020 will be the (multiple speakers)?

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Pietro Salini, Salini Impregilo S.p.A. - CEO & Director [25]

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Every year, if you ever looked into the papers that we have just disclosed and probably if you look at it in a better detail, you will have a different idea.

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Jamie McFarlane, Bybrook Capital LLP - Partner & Senior Analyst [26]

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Well, can you please give guidance for H1 2020 (multiple speakers)?

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Massimo Ferrari, Salini Impregilo S.p.A. - General Manager of Group Finance & Corporate [27]

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We never gave the guidance for 6 months in terms of cash generation. We always said that this company has to generate cash in a long-term period, meaning some year. This is what we told during the equity road show for the capital increase. No one told that in 3 months, 6 months, we can generate cash at equity or operational level. So we are working on different levers. Some of them successfully helped the results in 2019. Some other are on work for 2020.

Happily, we have very sound geographic diversification. So we have not to rely on single project or single country. We can face also this very difficult situation for the COVID-19. We have a lot of cash. We still have EUR 500 million of backup line. We have a lot of guarantees and surety support. So we can face also this difficult time with a very strong financial position. I think we can move to the next question.

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Operator [28]

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The next question is from Alessandro Tortora of Mediobanca.

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Alessandro Tortora, Mediobanca - Banca di Credito Finanziario S.p.A., Research Division - Research Analyst [29]

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Okay. I have, let's say, 4, maybe 5 questions, but they are really, really short. The first one is on the claim you mentioned on Lane side. Can you tell us, let's say, what was, let's say, the underlying issue, okay, behind this agreement you made on the Florida project? If it was, let's say, I don't know, any -- around any mistake you made on, let's say, the planning of the project? So just to understand the reason.

The second question is on the time line of, let's say, Astaldi deal and the -- for the amalgamation if you're considering clearly the uncertain situation you stick with, let's say, an amalgamation around summer, before summer, just to have any idea.

The third question is on Texas. So clearly, you are confident to book, okay, as soon as possible, the project. Just to have an idea, what are the next, okay, steps, official steps in order to include the project into your backlog?

The fourth question was on, yes, was on the cash generation for 2020, in the sense that considering the shift you mentioned during the presentation on the cash-in of some Italian projects, are you confident, let's say, that at least in 2020, you get debt reduction of a similar extent, thus far equal to at least EUR 200 million, so the delay in payments you saw in Italy?

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Pietro Salini, Salini Impregilo S.p.A. - CEO & Director [30]

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Let's start with Lane and what we did it for Lane. So this contract, the I-4 is a contract in which Skanska is the managing company. They accounted for losses and they decided that these losses could be outcome -- out placed by request to the clients. They negotiate a transaction with the client, and they are going to sign it. What we think that this deal is not sufficient, and we are requiring them to cover the losses they have caused to the joint venture.

At the same time, we have accounted for the same losses that we're foreseeing from this project. So we think, from one side, we have made a provision for I-4 in terms of the total loss, which is foreseen by the managing company. And at the same time, we are making a litigation against the company for their conduct into this work.

Out of that, Lane in 2020, it is foreseen to have a positive EBIT of around 2%. So the turnaround of Lane has been completed. And the fact -- and I take this opportunity to say that Texas is now going even faster than what's foreseen. I just received a message from Texas Central in which the process of obtaining the final authorization and license has been completed and they are fully confident that the financial closure can take place into the third quarter of 2020.

This gives to Lane and Salini a totally different pitch. Lane will become one of the largest corporation in terms of construction infrastructure in U.S. We will receive around EUR 2 billion of turnover per year from this project for the next 7 years. And Salini, as well will have -- as we call it, WeBuild, will have a very large exposure to the U.S. market into the future.

Going back to Astaldi, we are very confident that in 26 of March, the creditor will express their positive agreement to the transaction and that the procedure into the tribunal will go as fast as possible, of course, respecting the laws. But everybody is aware that this amalgamation is needed for Astaldi, for the people and for the employees and for everybody and for Italy.

So I think that there is a very good atmosphere in terms of bureaucratic attitude towards the conclusion of this transaction. So the 2 put together will make a company that in 2022 will make more than EUR 11 billion of turnover and with a different financial structure, with a totally renewed portfolio. I think it's very important.

We'll give this list -- this line into the next coming weeks as soon as is possible to make a clear view on what the effect of this pandemia will have on the market and on the future of this company. But those things remains, and the fact that the need for the infrastructure in Texas will remain, the process with Astaldi will remain. So let's say, we will have some adjustment probably, but the main streamline of the business plan will remain.

For instance, 100 or the cluster of the business plan is entering to a totally new business, which is maintenance. As you have seen, Italy is badly need -- in need. But it's not Italy, it's everywhere in the world, there is a need for a large player in the maintenance of the infrastructure, which are not look at that in a global way.

So I think that there is room for a large player. And also, this will make easier for states, for concessionary, for the network to be maintained, having a large partner like us. And having the possibility as such to coordinate the smaller and smaller partner and local partner to give a product of quality and at the same time a single contract towards the same concessionary.

Imagine, for instance, the need of Autostrade, the need of ANAS for the entire network of the maintenance to have a single player that propose to them a contract of maintenance and that this player can distribute to the local players, to the broker community part of the work, maintaining quality, maintaining the monitoring and all these aspects for those concessionary, which probably need a player like that.

So in addition, this model can be applied elsewhere in the world. We were mentioning before that we didn't have the time to look at the need of maintenance that the infrastructure in U.S. have or in France or in Germany or in Spain. We are all with the same problem. We came to the end of the life of infrastructure, which has been built into the past, and no one has thought about a global solution to those problem that arise.

Now we face the collapse of part of this infrastructure because of that non-forethinking about that. And there is also an opportunity for us to enter into this business. This will have a very big effect into the stabilization of the cash flow and will give a steady turnover coming out of that that can be -- can make less volatile our activity. So I think this is very important in the portfolio of our opportunity.

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Massimo Ferrari, Salini Impregilo S.p.A. - General Manager of Group Finance & Corporate [31]

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Alessandro, what we are going to disclose with the new business plan is a different business model where we have, of course, the core business on the EPC segment, as you know, including Progetto Italia. But we want to have the 2 different streams, the maintenance and monitoring and repairing stream, starting from Italy.

And then we just sent some letters to 10 major infrastructure funds in order to develop with them a partnership in order to bid to the huge amount of works that include the equity side of investment, having a global partner that work with us. So we are working also on stabilizing the cash flow in a shorter period using this new different business model. And leveraging also on the Progetto Italia shareholder base and on our more strong financial position. Texas, probably, Pietro has some news.

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Pietro Salini, Salini Impregilo S.p.A. - CEO & Director [32]

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About Texas, we just received, as I told, the news from the client that the final authorization are there. So this is -- we'll have a very large change into the activity of Lane for the importance of this single contract, which has a very good marginality. We already managed that with our clients. They are happy with that, and it's an important job.

So I think that this -- if as we've foreseen, we will be closing during the first quarter. We will have even some beneficial effect on the 2020 full year of these contracts. But for the moment, the turnover is expected to have some effect. It's important in effect into 2021 accounts into the business plan. So we'll discuss that later when we'll present our business plan in detail.

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Alessandro Tortora, Mediobanca - Banca di Credito Finanziario S.p.A., Research Division - Research Analyst [33]

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Okay. And Massimo, sorry, the question was on the cash-in shift, okay. If, let's say, at least considering the uncertainty, we can assume that this can be seen as a reduction, okay, in terms of, let's say, gross, but even net debt for 2020, partly?

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Massimo Ferrari, Salini Impregilo S.p.A. - General Manager of Group Finance & Corporate [34]

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Yes, for sure.

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Alessandro Tortora, Mediobanca - Banca di Credito Finanziario S.p.A., Research Division - Research Analyst [35]

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Okay. Okay. And the last question was, sorry, it was on the guidance related to the top line that you see in the high single-digit area focusing on Italy. Do you believe considering, let's say, all the effort the government is putting in order to speed up the execution of the project, do you believe that Italy can outperform this high single-digit top line growth in this year, hopefully?

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Pietro Salini, Salini Impregilo S.p.A. - CEO & Director [36]

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Yes. We hope that we could. Of course, we have still a large part of our portfolio that is coming from the past that is slow performing. And with those acts from the government, we expect to have a development of revenues from that portfolio that will be better than expected. What we see now and I just discussed it with members of the government, that the attention on infrastructure is a priority for them. They want to find out ways.

I just received from the Minister of Transport the news that she's going to nominate a numbers of commissioner to have the power to streamline all activities and to make a shortcut on bureaucracy. This type of attitude will, of course, change the -- will be transformational for Italy for the development of, let's say, turnover for us in Italy and will have a large impact.

The fact that we have no other competitors as well, it's something that is important because we are now the player for Italy for those large projects and, let's say, of that I think that we have to make a responsible answer to the government in terms of employment, in terms of development.

As we are demonstrating on the Genova bridge, in which notwithstanding whatever, we are delivering and the bridge is there now after less than 1 year. We started the first concrete pouring in June last year, and we are going to close it before. So let's say, in less than 1 construction year, the bridge is there. I don't think that this is something to add on that. Everybody is now talking about the model of Genoa in Italy and how to do things.

Of course, this needs a very good administration and having the power to decide, but also a very good company to execute it. It's not only a matter of powers. So if you have a lot of people, which is probably having the power to decide everything and you don't have a very good company, you cannot do that. So this is it.

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Operator [37]

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Gentlemen, there are no more questions registered. So I'd like to turn the conference back over to Mr. Salini for any closing remarks. Mr. Salini, would you like to make any closing, sir?

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Massimo Ferrari, Salini Impregilo S.p.A. - General Manager of Group Finance & Corporate [38]

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There is another question?

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Operator [39]

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No, sir. There are no questions registered at this time.

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Pietro Salini, Salini Impregilo S.p.A. - CEO & Director [40]

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Thank you.

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Massimo Ferrari, Salini Impregilo S.p.A. - General Manager of Group Finance & Corporate [41]

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Okay. So thank you very much. If you have any other question to -- you can ask to our Investor Relations team.

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Pietro Salini, Salini Impregilo S.p.A. - CEO & Director [42]

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Thank you.

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Massimo Ferrari, Salini Impregilo S.p.A. - General Manager of Group Finance & Corporate [43]

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Thank you very much.

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Operator [44]

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Ladies and gentlemen, thank you for joining. The conference is now over, and you may disconnect your telephones.