ACE.MIACE.MIMIL
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Operator: Good afternoon, ladies and gentlemen. This is the Chorus Call conference operator. Welcome, and thank you for joining the results as of the end of September of the ACEA Group. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Dario Michi, Head of Investor Relations of ACEA.
Dario Michi: Ladies and gentlemen, good afternoon, and thank you very much for joining the presentation of the results as at the end of September 2025 of the ACEA Group. Francesco Ragni, CFO; and Ms. Valentina Bracaglia, Deputy CFO and Head of Planning, will go through the presentation. I will give the floor now to Pier Francesco for the presentation.
Pier Ragni: Good afternoon, ladies and gentlemen. As usual, we shall start our presentation by considering the regulatory and market environment. In Water business, we point out the update of the -- 2-year update of the tariffs, whereas in the Electricity business, we would like to point out the lack of activation of the trigger with reference to the remuneration rate of the capital for 2026 remains at 5.6%. As to the price of commodities, the price of electricity and gas in the first 9 months of 2025 recorded an increase of 14% and 20%, respectively, versus the same period last year. As to the interest rates, I'd like to confirm the trend which was recorded in the first 6 months of the year with a decrease of rates versus 2024, both in the long and short term of the curve. Let's now move on to Slide #4 of the presentation. As to the main highlights of the first 9 months of 2025, the results show a strong growth of economic items and confirm the soundness of the financial structure of the group. First of all, I point out that in line with IFRS 5, the results of ACEA Energia, which is subject to disposal have been reclassified as discontinued operations. For purposes to have the possibility to compare data, we have shown pro forma results simulating the deconsolidation of discontinued operations and of Acquedotto del Fiora in the first 9 months of 2024. Pro forma EBITDA reaches EUR 1.84 billion in -- growing by 8% versus the first 9 months of 2024. The increase of recurrent pro forma EBITDA adjusted to the changes in the perimeter, which you see later on, stands at 10%, which is driven mainly by the growth of the Water Italy business, grids and public lighting and generation. The contribution of regulated activity of the consolidated EBITDA is 95% of the total. The net profit of the first 9 months of 2024 is EUR 415 million, up 46% and among other components is driven by the capital gain of the disposal of the high-voltage network for about EUR 109 million. The recurrent net profit grows by 8% year-on-year following the dynamic recorded at operating level. CapEx growth of grants grew by 6% versus the first 9 months of 2024 and now stand at EUR 1 billion. The operating cash flow is positive for EUR 19 million allowing us to maintain a sound financial structure with a P&F financial structure EBITDA pro forma ratio equal to 3.39x. The ratio takes into account the future cash in of the disposal of ACEA Energia and the cash in of the disposal of the high-voltage network, which occurred in September. Slide 5, we recorded the main indicators of the dynamics recorded in the first 9 months of the year, which, as I said, showed a strong growth trend. As to the EBITDA, ACEA recorded a growth of 10% versus the result of 2024 adjusted for one-offs and change in the scope. CapEx net of grants are EUR 843 million, of which EUR 67 million related to activities of businesses which are disposed net of the perimeter of ACEA Energia which is to be disposed of, and investments CapEx, regulated CapEx represented 95% of the total net profit, which, as I said, includes the contributions of businesses that we disposed, grows by 8% on a recurring basis and reflects the very good operating performance. The net financial position moves from EUR 4.944 billion as at 31st of December 2024 to EUR 5.083 billion at the end of September 2025. I do apologize, but I can no longer hear the speaker. I do apologize, but I do not hear the speaker. The net financial position pro forma to take into account the asset rotation as described in the footnote moves from EUR 4.343 billion as at the 31st of December 2024 to EUR 4.693 billion as at 30th of September 2026 (sic) [ 2025 ] with a ratio debt to EBITDA, which is 3.39x. The EBITDA in the first 9 months of 2025 has grown, which is due to tariffs and the operating activities of water, and it was also driven by the grid operations driven by the RAB and the growth of the results of generation and also because of prices. On the right of the slide, you see the main one-offs and changes in the scope and these amount to EUR 27 million for 2024 and relate to mainly past tariff items related to period 2022, 2023. In 2025, changes in perimeter amounted to EUR 15 million and related to the incentives for a quality in the Water business. Now Mr. Ragni is reconnected. As to the recurrent net profit, on Slide 7, the growth versus the first 9 months of 2025 is due to the operating performance, which contributes positively for EUR 26 million. That effect is partly offset by the financial management because of lower financial proceeds because of the reduction of rates. As to the EBITDA on the right, you see the detail of the one-off components. As to Slide #8 of the presentation. Now considering also the contribution of ACEA Energia in the first 9 months of 2025, we have invested around EUR 1 billion, up 6% versus 2024. Such investments for about 89% is related to regulated businesses of water, grids and environment. The net of ACEA Energia which is subject for disposal, the contribution of regulated businesses to CapEx amounts to 95%. Out of that EUR 1 billion of investment, EUR 167 million were financed by the cash in of the grant. On the slide, you see the activities carried out in each sector like the widening and update of water pipes and sewers and the upgrade of the grid for general electricity distribution. Slide #9. Here, you see cash absorption of the first 9 months of 2025, which is around EUR 140 million and is negatively affected by the changes in working capital related particularly to higher receivables and the network balancing, which we expect to be absorbed in the last quarter. And then also, it is affected by regulatory receivables, which is to be absorbed in the fourth quarter. We have to underline referring to working capital that in the third quarter of 2025, ACEA generated cash for about EUR 66 million, thanks to the efficient management of commercial receivables and payables. To be more transparent as we did when we presented the results of the first 6 months, we represented in a distinct manner the contribution of the company's consolidated equity contribution is EUR 30 million versus EUR 9 million in 2024. This clarifies better the dynamic of the changes in funds, which reflects the reclassification of ACEA Energia among discontinued operation. I will not dwell on CapEx charges, taxes and dividends as these items can be directly interpreted. As to M&As, we need to underline EUR 210 million represented by the cash in from Terna for the disposal of the high-voltage network equal to EUR 227 million. Now let's move on to Slide #10, the financial structure. Here, you can see that the average cost of debt as at the 30th of September 2025 stands at 2.04% versus 2.16% at the end of 2024. The cost of debt is positively affected by the reduction of variable rates connected to the Euribor for the part of debt which is variable and which is equal to 20% of the total at the end of the third quarter. Moreover, let me tell you that in the third quarter 2025, we took out three bilateral bank lines for a total of EUR 350 million, which at the end of September was reimbursed the bond -- green bond amounting to EUR 300 million that was issued in 2025. I'll leave the floor to Ms. Bracaglia.
Valentina Bracaglia: Slide #11, we see the main KPI of the Water Italy business. Let me remind you that the results of the first 9 months results were expressed pro forma so as to have the possibility to compare the data. In the first 9 months of 2025, the recurrent EBITDA adjusted mainly because of the incentives for contractual and technical quality goes up by EUR 42 million, plus 8%. That is due to tariff growth guided by CapEx and the increase of results of consolidated -- company's consolidated at equity and also because of operating efficiency. Net of public grants investments grew by EUR 29 million, up 7% year-on-year and related mainly to operations on Acque del Sud and water cleaning plants and maintenance of grids. Net of investments related to Acquedotto del Fiora, growth year-on-year is EUR 61 million, that is up 15%. Let me now move on to Slide #12. Here, you see the main KPI related to the grid and public network. Despite the reduction of the WACC by 40 basis points as of the 1st of January 2025, the recurrent EBITDA of the business goes up by EUR 29 million, up 9%. Such an increase is due mainly to investments made that is growth in RAB and also this is due to the update of the revaluation of the RAB starting in 2025. Investments net of public grants around EUR 210 million are slightly decreasing versus the previous year, whereas investments growth of public grants are growing. In the environment area, net of one-off, the EBITDA is slightly increasing because of the greater margins associated to WTEs. The investments decreased by EUR 28 million versus the previous year. And this is mainly due to the revamping operations on the WTE of Terni out in 2024. Let me now move on to Slide 14. You see here the results of the Generation business unit results. The recurrent EBITDA grows by EUR 17 million, and this is due mainly by the favorable energy scenario and the greater generation mainly to the Hydroelectric and Photovoltaic business. In detail, the energy produced rose by 24% from 485 to 602 gigawatt hour, thanks to an increase of 42 gigawatt hour in the hydroelectric production and -- plus 71 gigawatt hour in the photovoltaic production. Investments in the first 9 months of 2025 amounted to EUR 21 million, growing by EUR 6 million versus previous year. I will give back the floor to Mr. Ragni for the updating of the guidance.
Pier Ragni: Thank you very much, Valentina. Now considering the strong growth experienced in the first 9 months of 2025, we have reviewed, as you have seen from the press release, the guidance of the EBITDA for 2025. The new guidance shows a growth of the EBITDA pro forma 2025 between 8% to 10%, starting from the restated result of 2024 of EUR 1.281 billion versus plus 6% and 8% announced in June 2025. The restated 2024 result was calculated starting from the 2024 EBITDA of EUR 1.428 billion communicated last March, adjusted to exclude the contribution of ACEA Energia on disposal. And on the contrary, the contribution of the high-voltage network [indiscernible] help the term, but included here for the first 9 months of 2024. Now as to CapEx, the guidance is EUR 1.6 billion, of which EUR 1.2 billion net of public grants. As to debt -- as to pro forma debt-EBITDA ratio, the guidance is confirmed and expect a range between 3.4 and 3.5x. Such range has been determined, including the debt and the cash in of the price of ACEA Energia expected in 2026. This is the end of the presentation.
Operator: [Operator Instructions] The first question is by Francesco Sala with Banca Akros.
Francesco Sala: Congratulation for your results. A couple of questions. The first one on the working capital. Can you tell us where is going to be the change for the full year? You said that you expect a reduction in the fourth quarter. Can you tell us something about it? Now I'd like to know something about the closing results after the disposal of ACEA Energia to Plenitude. And how can this change the results? The third question, I'd like to have an update of the incinerator in Rome. Any piece of news there? I'd like to know whether in the next few months, you are going to give us an update of the business plan.
Unknown Executive: Let me answer these questions. As to the update of the business plan, we are working on it. The goal is that of providing an update within the first quarter of next year. As to the WTE, we are going on. We now own the land. As to ACEA Energia, we expect the closing as of the beginning of the year, next year. The company is already among the discontinued operations. So there will be no impact on the EBITDA. There will be an impact on net profit, which will be offset by the money that we cash in and the capital gain that we cash in from this transaction. And we will give you the details after the closing of the deal because there are a number of calculations which are to be made and will be defined at the moment of the closing of the deal. As to the other question, I will hand the floor over to Valentina.
Valentina Bracaglia: As to the net working capital, we expect a neutral trend, a neutral dynamic. In the last quarter, we expect a similar trend that we observed in the last quarter of 2024. And also as to the equalization receivables or equalization credits, we expect them to be absorbed by the end of the year. And this is the view that we have for December. Thank you very much.
Operator: The next question is by Javier Suarez with Mediobanca.
Javier Suarez Hernandez: I have a couple of questions to ask. First of all, the 2025 guidance, I have a question which is more strategic in nature. When you presented your last business plan, you talked about a growth of the company around 5%. Now looking at the results, the company is going through a stronger structural growth versus what you indicated in the business plan. So I'd like to know something about it more qualitatively rather than quantitatively. As to the guidance, I'd like to have an indication for 2026 guidance. Maybe you can tell us something about 2026. But in 2025, your guidance for net income, what will it be? As to the working capital, I'd like to know something more strategic. What are the management actions that the company is adopting to reduce the net capital -- net working capital absorption?
Unknown Executive: Thank you very much for these questions. I'd like -- I try to answer the first two questions together. Now versus the business plan expectations, we are experiencing a stronger growth. And with the new business plan, we shall update the figures. As to the trend that we expect for 2026 is that in the Water business, considering the consultation document that was published, which doesn't show strong WACC changes and also tariffs have already been approved. We expect tariffs to be in line with what we have experienced or have seen in 2025. In the Energy business, there was no activation of the trigger, and therefore, the regulated return is stable. As to the growth trend of the EBITDA and the update of the numbers, we shall provide indications when we update the business plan. As to the guidance, we do not provide a guidance on the net income, but we can say that we do not expect changes, big changes for recurrent operations. And therefore, the net income should not basically be -- will fall in line with the guidance that we have given for other items. Now as to other activities, we are working on credit collections on customers, activation of all of the capabilities and levels that we have to cash in the money. And then what affects the net working capital are the profiles of cash in of the [indiscernible] bills or equalization bills. And now in the first 9 months, we see the normal results related to the network equalization. So here, the regulatory factor has an effect. Let me also tell you that we are seeing a greater stability of the net working capital in the year, and I think it's going to be stable, stable going forward is what I can tell you, generally speaking. Thank you very much.
Operator: The next question by Roberto Letizia with Equita.
Roberto Letizia: I'd like to have an update on the electricity or energy distribution concessions. I'd like to know something about it. Do you have indications about it? Do you know something about the timing when this is going to occur? I'd like also to have an update on the -- update of the debt rating on the part of agencies. Is there a moment when you will rediscuss the rating with the agencies? And what are the priorities in that case? What are the main interventions, CapEx, M&As, remuneration of shareholders, all of the three, can you give us indications about it? And then considering the reorganization and after you get out of the Retail business, what are the priorities? What is the focus of the management team? Is there going to be a review or a change in the governance of the company? Are there options opening up in the Water business, for instance, I don't know, Acquedotto del Fiora. So I just want to know what's next for ACEA in terms of its structure. A couple of technical questions. First, why is the tax rate higher, which is now 32.5%. What kind of considerations are to be made going forward? And then are there going to be possible contributions for ACEA in relation to data centers?
Unknown Executive: Well, thank you very much, Roberto. Now as to the extension of the concessions for energy grids, well, this is a recurring question, which is usually asked when we meet. We are waiting for the authority to decide. As I have always said, whatever is decided by the authority is something on which we rely on the asset rotation that we made after the disposal of the high-voltage network and the disposal of ACEA Energia to come allows us to focus on our own main business, increasing investments in the Water business and in the environment sector. As to M&As, when we speak of M&As, we do not look at M&As. Of course, if there are opportunities, we shall pursue them, but we have a growth trend, which is related to our own businesses. You know very well that Water business requires constantly investments due to the fact that there is a low supply of water and higher demand of water and networks are to be constantly maintained and updated. As to the energy grids, you need to work on the resilience of such grids. Look at what happened in Spain, in Turin, in Bergamo. Hence, we shall focus our efforts there. As to the dialogue with the rating agency, this dialogue is ongoing. Of course, they would want to see the new business plan. And considering that our business now is 90% regulated, we shall use the greater financial leverage to focus constantly on our RAB and on the environment. Now as to the governance, I don't know what to say. The disposal of the Retail business doesn't change anything in terms of our governance. And of course, we shall see, but I don't have much to say about this.
Valentina Bracaglia: As to the tax rate, this is Valentina speaking. The tax rate is in line with the data of December 2024, which was 32.6%. The tax rate are affected by nonrecurrent items, disposals and one-offs. And so we expect a realignment of the tax rate to what we had in our business plan, which is also in line with our historical data. As to the question about the data center, well, I can say that as a manager of the distribution network in Rome, we see the opportunity to strengthen the network and to, of course, serve the needs and demand stimulated by also the data center, and this is part of our plans. Now as to further opportunity related to the Data Center business, we are assessing or looking to see whether there are opportunities, but we do not see for the moment specific developments. Now the Data Center business at the moment is more concentrated in the north of Italy, where there is greater demand whereas our Water and Energy business is more focused in the center and south of Italy. But of course, we shall use our competence and our infrastructures. But this is something that we shall evaluate on a case-by-case basis.
Operator: [Operator Instructions] Ladies and gentlemen, at the moment, there are no other questions. No, there is one follow-up question by Roberto Letizia with Equita.
Roberto Letizia: Now, I do apologize, I have a follow-up question to ask something about the JV with Versalis. Can you tell us something about this, the timing, the size of the operation?
Unknown Executive: Now this JV is for us an opportunity to extract more value from our plants, recovery and recycling of plastic. Now we are focusing on mechanic recycling and on the -- and on polypropylene for food use in terms of recycling. And in this case, we are using the chemical recycling processes. Now we are studying the potential of this partnership, and we hope that this will have further developments in the future.
Operator: Ms. Bracaglia, ladies and gentlemen, at the moment, there are no other questions from the conference call.
Valentina Bracaglia: Well, thank you very much for joining in. And if you have any other questions, you can call us directly. Thank you very much.
Operator: This is the Chorus Call conference operator. The conference is now over. You can disconnect your phones. Thank you. [Statements in English on this transcript were spoken by an interpreter present on the live call.]