Ellaktor SA

ATHEX:ELLAKTOR

Earnings Call Transcript 2021-Q1

[Operator]

Ladies and gentlemen, thank you for standing by. I'm Constantino, your Chorus Call operator. Welcome, and thank you for joining the ELLAKTOR Group conference call and live webcast to present and discuss the ELLAKTOR's Group first quarter 2021 financial results. [Operator Instructions] And the conference is being recorded. [Operator Instructions]

At this time, I would like to turn the conference over to Mr. Efthymios Bouloutas, CEO of ELLAKTOR Group; Mr. George Poulopoulos, CFO of ELLAKTOR Group; and Mr. Dimitrios Koutsoukos, Director of Business Planning and Investor Relations.

Mr. Bouloutas, you may now proceed.

[Efthymios Bouloutas, executive]

Thank you. Good afternoon, ladies and gentlemen, and good morning to our colleagues joining from the U.S.

My name is Efthymios Bouloutas, and I'm joined today with ELLAKTOR's Group CFO; Mr. George Poulopoulos; and Investor Relations Director, Mr. Dimitrios Koutsoukos.

Thank you for dialing in, in ELLAKTOR's Q1 2021 financial results, and it is my pleasure to speak -- to be speaking to you today as the newly appointed CEO of ELLAKTOR Group following the completion of the tenure of my predecessor, Aris Xenofos.

I'd like to follow the presentation that has been uploaded in our website with a title Q1 2021 Group Results. And I'd like to point you to Page #3. So this page presents the highlights of the main components of our P&L, shareholders' equity and human resources. So gross revenues are EUR 193 million, minus 14% year-on-year, and we gave a breakdown between Greece, EUR 147 million, versus international, EUR 46 million. We'll give you details about the revenue, let's say, distribution at later slides.

The EBITDA of the group for the first Q came in at EUR 40 million. Greece accounts for the majority of that, EUR 38.5 million, and EUR 1.7 million from international operations. This figure represents something close to 10% year-on-year. And here, we have approximately EUR 12 million lower EBITDA income in concession and EUR 8 million in construction. So this minus EUR 20 million have been partly offset by EUR 8 million up, better performance in the RES business and other EUR 2 million in other. EBITDA margin stands at 21% vis-à-vis 22% for the first Q of 2020.

Profit before tax came in at minus EUR 7 million versus positive EUR 2.8 million same quarter last year. Cash and liquid assets stood at EUR 403 million, down EUR 2 million versus first Q of EUR 203 million (sic) [ EUR 406 million ]. Shareholders' equity, EUR 224 million. And our current payroll count is approximately 5,500.

Turning on to Page #4. Here, what you can see is the consolidated P&L, where you see the difference of the Q1 results versus -- 2021 versus the Q1 results 2020. We explained most of the differences. And here, I'd like to point out to the administrative expenses that stood at EUR 12 million approximately, posting a reduction of 24% year-on-year, mainly due to lower OpEx in the headquarters and construction.

Moving on to Page #6. This page depicts the net sales, EBITDA and profit after tax on the consolidated basis and also gives a segmental breakdown of the figures of net sales, EBITDA, EBITDA margin and profit after tax. This is a new slide in our presentation, and it gives you an immediate view of the health of the businesses.

Before handing over to Mr. Poulopoulos, I'd like to take an opportunity to give you also a brief business update on the construction business. This quarter, we have signed 2 new projects in Egnatia Odos for operation and maintenance, approximately EUR 39 million. All this information is depicted in the slides later in the presentation. We signed a new project of the expansion of steel network in the cities of Xanthi and Drama, EUR 17 million. And we've been declared preferred bidder for the construction of the sewage networks and pipelines in the areas of municipalities of Rafina, Spata and Artemis of approximately EUR 32 million.

On the Concession business, Marina Alimos, which is the largest marina in Southeast Europe with 100 -- 1,100 berths, is fully consolidated since the first Q of 2021, contributing to a positive EBITDA of EUR 0.3 million for the first Q.

On the new Renewable Energy business, we have an installed capacity of 493, which is the same as the one that we've posted at the full year results. However, this capacity is going to be working for us for the full year. So we expect a better profitability of this business for this year vis-à-vis the previous year.

On the Environment, we'd -- I'd like to point out that today, we've been declared the preferred bidder for the EUR 49 million 3-year project, which is a waste management project, obviously, in a consortium where ELLAKTOR participated with 55%. This project relates to the transition of a waste management facility to a green factory.

And finally, on the Real Estate highlights, the company has obtained a Presidential Decree approval for urban planning. So that enables the company to move forward with the development of the Cambas Project.

And with this business bullet points, I'd like to hand over to Mr. George Poulopoulos, who's going to give us a better overview of the quarter and evolution of our P&L items, the cost items and the segmental performance. George?

[George Poulopoulos, executive]

Thank you, Efthymios. Turning to Page 7 of our presentation. Group net revenue stood at EUR 193 million in Q1 '21 compared to EUR 225 million in Q1 '20, a reduction of EUR 32 million. This year-on-year decrease came mainly from the construction sector, where revenues decreased by EUR 29 million from EUR 126 million to EUR 97 million, and concessions, which decreased by EUR 10 million year-on-year. This decrease was partially offset by revenue increases in RES and Environment by EUR 8 million and EUR 2 million, respectively.

Profit before tax in Q1 '21 stood at minus EUR 7 million versus plus EUR 2.8 million in Q1 '20, with the results mainly negatively impacted by Construction, Concessions, while Renewables had a significant positive contribution.

Turning now to Page 8, in which we present the quarterly EBITDA performance. As you can see, Q1 '21 performance versus Q4 '20 is better in RES, in Environment as well as in Construction segment, while it's almost on the same level in Concessions and lower in Real Estate.

On Page 10, we present the evolution of cost items. Cost of goods sold is down in Q1 '21 by 10% compared to Q1 '20. The number of employees is down by nearly 1% year-on-year at the group level, while in Construction, which is undergoing a transformation exercise, the number of employees was down by 16%. Administrative expenses in Q1 '21 were at EUR 12.3 million, down by 24% compared to Q1 '20. This marks the lowest level of administrative expenses in the last 9 quarters, in line with management's focus on cost rationalization.

On Page 12, total assets were at EUR 2,881,000,000 at the end of March '21 versus EUR 2,822,000,000 at the end of 2020, recording a delta of approximately EUR 60 million, mainly due to the incorporation of Alimos Marina's right-of-use for the first time.

On Page 13, you can see in line 9 of the table, net debt that stood at EUR 750 million, excluding Moreas, at the end of March '21 compared to EUR 707 million at the year-end 2020.

On Page 14, we present the evolution of cash and liquid assets, which at the end of March '21, stood at EUR 403 million versus EUR 406 million at the end of December '20. For Q1 '21, operating cash inflows amounted to EUR 5.5 million versus outflows of EUR 39 million in Q1 '20, mainly due to favorable working capital movements. Investment cash flows amounted to inflows of EUR 12 million in Q1 '21 versus outflows of EUR 7 million in Q1 '20. Cash outflows from financing activities reached EUR 90 million versus inflows of EUR 38 million a year ago. Q1 '21 outflows is mainly driven by increase in restricted cash, out of which EUR 13 million due to debt service reserve accounts build-up obligations and debt repayments of EUR 6 million.

Now let me go through the segmental analysis of Q1 '21. On Page 17, which is related to the Construction sector. You see that backlog stands at EUR 1.7 billion, with 98% of that is related to Greece, Romania and Qatar. Q1 '21 EBITDA in Construction stood at minus EUR 10 million compared to minus EUR 1 million in Q1 '20, mainly due to liquidity constraints that delayed the completion time line of several projects.

Moving on Page 18, in which we present the Concession highlights. Revenues stood at EUR 40 million in Q1 '21 versus EUR 50 million in Q1 '20 or a 20% decrease. The decrease of revenues in Q1 '21 is due to the decreased traffic in Attiki Odos by 28% and by 38% in Moreas as a result of restrictions in movement and lockdown in both by the state in response to the COVID-19 pandemic. As you can see on the bottom diagram with the red line, traffic in Attiki Odos has started to improve significantly since mid-March '21 until today. Concessions EBITDA amounted to EUR 20 million in Q1 '21 versus EUR 31 million in Q1 '20, marking a decrease of 38%.

On Page '19, we present the Renewable Energy Sources highlights. Revenue stood at EUR 32 million in Q1 '21 versus EUR 24 million in Q1 '20 or up by 36% year-on-year due to increased installed capacity, which currently stands at 493 megawatts and improved wind capacity factor to 33% versus 31% in Q1 '20. As we have indicated, the growth plan of our Renewable business is underpinned by the strategic agreement with EDPR as early stages of the planned co-development of up to approximately 500 megawatts are underway. Renewable Energy Resources EBITDA stood at EUR 28 million in Q1 '21 versus EUR 20 million in Q1 '20 or up by 40% year-on-year.

On Page '20, we have the Environment segment highlights. Revenues stood at EUR 24 million in Q1 '21, up from EUR 22 million in Q1 '20 or plus 9% year-on-year due to the increased completion rate of construction projects. EBITDA stood at EUR 4.3 million in Q1 '21 versus EUR 4 million in Q1 '20, increased by 6%.

Lastly, on Page '21, we have the Real Estate highlights. Revenues stood at EUR 1.3 million in Q1 '21 compared to EUR 1.8 million in Q1 '20, decreasing by 32% due to the COVID-19 impact and the lockdown measures on the economy. For the same reason, EBITDA decreased to EUR 0.8 million in Q1 '21 versus EUR 1.3 million in Q1 '20.

This concludes my presentation of group and segment performance, and I would like now to open the floor up for questions.

[Operator]

[Operator Instructions] Ladies and gentlemen, there are no questions at this time. I will now turn the conference over to management for any closing comments. Thank you.

[Efthymios Bouloutas, executive]

We don't have any further comments at this stage. We just like to point out that as has already been communicated, we are undergoing a financial, let's say, reorganization of the group. So we have announced the share capital increase with the approval of the general assembly for EUR 120.5 million share capital increase. And now we have filed the prospectus with the Securities and Exchange Commission of Greece, Hellenic Capital Markets Committee, and we expect mid- -- by mid- to end of June their approval. So provided we get the approval at this time, 1 month later, the actual process of the rights issue will commence.

And as we have also announced, we have completed the EUR 50 million bond loan issue at the level of AKTOR, which was a successful completion, and that helps restart the AKTOR activity and support all the working capital needs in order to facilitate the smooth execution of the current construction project, the prospective ones.

So with that, I'd like to thank everybody for their time to participate in our conference call. Thank you very much. Have a good evening.

[Operator]

Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephone. Thank you for calling, and have a pleasant evening.