Operator:

Massimo Battaini: Good morning, everyone and welcome and thank you for attending this full year result of 2024 earning calls. As you see from this first chart, a stronger EBITDA delivery €1.127 billion in line with expectation with midpoint to the guidance, a very high 11.2% EBITDA margin in line with the 9 months year-to-date last year and probably the record high of the EBITDA margin achieved by the company. After 9 months of slow organic growth, in fact it was minus 1.4% the organic growth in 9 months 2024, we delivered significant organic growth in 2024 quarter four, mainly driven by strong demand in strong delivery and transmission in Power Grid and in Digital Solution. Great performance in free cash flow with €1 billion free cash flow. Moving to the more detailed information, you see a significant surge in EBITDA, 18.4% over 2023. It should take €200 million coming from the perimeter changer and if you deduct this €200 million from the €1.927 billion achieved last year, you end up with €1.728, which is by coincident exactly €100 million improvement over 2023 on a like-for-like, basis. Free cash flow also outstanding growth from €700 million plus to €1 billion plus 40%. I’d like to draw your attention to the EBITDA margin in the right-hand side of the page where with this 11.3% EBITDA margin, you see a significant growth over 2023 but more importantly over 2022 which was our baseline for the last time capital market -- our last capital market day, so 200 basis points additional in profitability barely across all business units. A quick comment on the climate ambition and the climate actions, 21% reduction in scope three versus baseline, confirmed that minus 37% in line with expectations scope one and two and paving our way towards the 55% reduction by 2030. Recycle, content in raw material surged to 16.2%, not really helped by the perimeter expansion but helped by strong effort across the legacy Prysmian in driving suppliers to a more waste and more recycled content into the raw material that we buy. Transmission performance, I think numbers speak for themselves. Strong organic growth in the quarter, 34%, driven by some additional installation activity and some additional capacity activity that occurred in quarter four. EBITDA margin in the quarter at the 15% similar to quarter three. And turning to the full year result, you see almost 20% organic growth over 2023, a significant improvement in EBITDA margin of 14.6%, the exit speed is very high 15% and we are now super confident about meeting the 16% goal that we set for 2025 in this business and capitalize on additional organic growth that will benefit from the capacity that has been expanded, which will come to fruition in 2025. Moving to power grid, the organic growth in quarter four was significant. Was not coming from a significant organic growth 9 month at 2024, it was in fact below 2%. Nice to report another quarter with a great EBITDA margin 13.5%, so we deliver full year in line with quarter four, 13.4% for the full year, two percentage point above the average of 2023. Maybe there would be a question later about the sustainability of this margin and I will answer the question but my comment I can share now is that yes, we see strong demand in the United States, we have a strong exposure to the United States and so we will have to consolidate, we think we’ll be able to consolidate a level of EBITDA margin between 12% and 13% also in 2025 and possibly leverage on the capacity expansion that is happening in the space. In I&C, we had a 10.2% performance in EBITDA margin in quarter four, vis-a-vis 18.8% in quarter four 2023. The EBITDA margin in quarter four 2024 softened a little bit, if you look at, if you remember what we did in quarter three 2024, it was 11.5% after the consolidation in core wire. We have seen some seasonal effect, which has driven -- some soften in price in one segment of the I&C, which is the copper building wire. So while the aluminum building wire, the portable cords and industrial products like medium voltage had margin improvement in quarter four copper building wire, has softened a little bit, I think is a temporary effect. We noticed this also in the first weeks of 2025, this season and the weather -- the harsh weather in North America didn’t help at all and so we think that this is a simply a temporary situation, driven by a few circumstances. Some residential demand are pretty low, which is not our space, but unfortunately is a space of some other competitors. And so we’re confident that with a season entering to the high peak from March onwards, we will rebound and regain momentum in the market also in volume, which has been very good by the way quarter four last year and also in prices. Full year EBITDA margin at 10.1% versus 10.7%. You have to remember that in 2023 we had the first start for 2023 still benefiting from this pack in I&C Legacy Prysmian business resulting from the rebound of the market post pandemic and inflations. Results in specialty was certainly not satisfactory. It’s not much different what we ended up delivering in quarter three in terms of EBITDA margin. We still suffer a lot from the automotive slowdown in volume and price more importantly and from some contraction in the elevator business in United States, again driven by the weakness of the residential market. Full year EBITDA margin are aligned with 2023 and we count on the stability with some upside for 2025 in terms of EBITDA margins. This is a solution, of course, we had an easy comparable versus 2023, where we posted a negative EBITDA, so €40 million EBITDA, 12.5% has been the margin for the business over the last four quarters. It’s centered, which is stable. Good news that we’ve seen finally a strong rebound in volume in North American market, which was by the way the cause of the collapse of the margins and the volume in the last two years due to this stock in process. So volume has started to rebound kind of aggressively I would say. Prices are still not where they need to be or still not in line with what we had at the time the market was very tight, so in 2022. But as we gain momentum in volume, confident the price will come along. 24% EBITDA margin is also what we envisage for 2025 moving forward. We’ll now comment across the board. I would like just to draw your attention on the circular economy drivers. Now we have 43% of our revenue connected to sustainable products, coming from 37% in 2023 and recycle content as I commented before as high as 16.2%. I insist on these two elements because these are the elements that benefit customers. These are the elements that help customers achieve and meet their sustainability goals. And these are the elements that we leverage and capitalize on to grow and add additional revenue, and in some cases premium price to our revenues. With this, I’ll leave the floor to Francesco for more financial insights.

Pier Francesco Facchini: Thank you, Massimo and good morning to everybody. To recap as usual, our profit and loss statement says in the region of €17 billion consolidating as you know Encore Wire for the second half. As Massimo already anticipated the organic growth for the full year is plus 0.5% with a good improvement in the quarter four, driven by a stronger surge in sales and the growth in the transmission business double digit -- a large double digit and driven also by a pretty good trend in the fourth quarter of both the power grid and also the recovering digital solution business. Adjusted EBITDA €1,927 million with a record EBITDA margin at 11.3%. You see on the right the bridge compared to the previous year of the four quarters and you clearly see in Q4 the very strong momentum and the very strong progression of the transmission business. Massimo anticipated that the transmission reached a 15% EBITDA margin in the fourth quarter, which position it very well to achieve and beat at the level of margins that we had anticipated in October 2023 in post. Power grid, very stable and very consistent improvement versus the previous year with a steadily high level of margin. Digital Solution is on the recovering path in particular the market in North America and is benefiting of these and as Massimo anticipated in Electrification, you see some little softening of the price environment of the margin environment in one segment of the North America I&C, the copper building wire and you see some weakness so that Massimo commented on the specialty business. But all in all, pretty solid Q4 results. For the rest of the profit and loss, the adjustments below the line are largely affected by the acquisition of Encore Wire because of the transaction cost and even more because of the purchase price accounting effect. Likewise, by the way, the depreciation and amortization, you don’t see a line here, but also this in the second half, specifically in the fourth quarter, has been as expected impacted by the purchase price. Accounting financial charges that you see as a totally in line with expectation arising to €225 million, which is discounting more than €100 million effect in the second half due to the acquisition. A pretty low tax rate benefiting over some one-off effects still related to the acquisition, and a group net income which surged to €729 million, which is in terms of diluted EPS a level of 2.52, which is compared to 2022 a CAGR, a growth year on year of 15%. You remind I’m sure that in Naples we anticipated an objective in terms of EPS CAGR of greater than 10% for at the time the period, 2022 -- 2027. Let me say that the first two years are certainly be better than this anticipated target. And let me also remark on the group net income that, the Group Net Income obviously discounts a negative effect from the acquisition because of the accounting treatment of the purchase price acquisition. To be very clear, in Q4 we are including negative effects of €80 million before tax coming from the pure purchase price acquisition, which is a reversal of inventory step up and the additional amortization and depreciation, which are coming with a top up, with a step up of the assets, which is a normal process in the purchase price acquisition. So, this to put the net income and the strength actually of the net income in the right perspective. Okay. We can move quickly to, the outstanding cash generation that Massimo commented. For the first time, we broke the wall of the €1 billion. I think we must be proud of that. And, obviously we benefited from a very strong and positive dynamic of the working capital. You see changes of a positive changes, a drop of €465 million driven by the transmission business. And you see also the extraordinary effects on our net debt coming from the acquisition, from Encore Wire acquisition €4.1 billion and also coming from the conversion of the convertible bond, the net of the share buyback which took place mid of the year and actually the share buyback in the second half for a positive impact the net of these two transactions of €406 million. Let me remark the €4.3 billion, €4,296 million to be exact, the debt at year end is largely better than we expected is €150 million at least better, likewise the free cash flow which is €130 million above the midpoint of the guidance of €880 million and this puts us already in a pretty good shape in terms of the leverage because in the region of two times in terms of ratio net debt on EBITDA, slightly better than we thought and that we expected. Last but not least, a very quick snapshot on the effect that our acquisition financing -- acquisition bridge refinancing that we did in November with the issuance of the two bonds for a total of €1.5 million add. This strengthened significantly our financial structure. You see that we extended the average maturity to 4.3 year and you see in green, by the way, the two bonds, the 4-year bond for €850 million due -- will be due in 2028 and the 7-year €650 million bond which will be due in 2031. So a much extended maturity, a stronger financial structure compared to the one that we had right after the acquisition and also very attractive conditions because the two bonds you remember were raised at an average, cost of funding of 3.7%. And also, let me remark to finish the fact that the composition of this debt, of this gross debt, in terms of mix of fixed and variable interest rate is very safe because 80% is at fixed rate and by the way, part of that was edged even before the interest rate increase, which took place in 2022, 2023. Okay, back to Massimo for the final conclusions.

Massimo Battaini: Thank you, Francesco. So with this result of 2024 and the [Indiscernible], we are pleased to confirm our guidance with a midpoint of €2.3 million as far as the EBITDA is concerned to €250 million to €350 million. Free cash flow with great stability, €1 billion midpoint for 2025 and further acceleration in the scope one and scope two reduction. So I will remind you that in a while, in less than a month, you will see much more about our future, about our ambition, our statement of targets for 2028 of course and also we’ll be very happy to welcome you in, at McKinney in Encore to see the facility and the powerful service level and the innovative product provided by this asset. So closing with a stronger remarkable performance, the transmission and power grid, integration from an organizational point of view and from a sales commercial in the sense of a footprint on field point of view has completed -- has been completed and we will tell you more about the speed of the synergies implementation at the Capital Market Day, great EBITDA -- great sorry €1 billion of free cash flow and consistent increase to return to shareholders. We are going to propose a dividend of 0.8 so 14% increase over 2024, which is better than what we thought we would do at the Capital Market Day where we set this at 10% growth year-over-year. And so with this, I think we hand over to you for your question or clarification about past year and the coming 2025 figures.

Operator: [Operator Instructions] Thank you. And the first question comes from the line of Daniela Costa from Goldman Sachs. Please go ahead. Your line is now open.

Daniela Costa: Hi, good morning. Thank you for taking my questions. I have three questions. If that’s possible, I’ll ask them one at a time. But maybe starting out with sort of what you bake in into your EBITDA guidance in terms of top line assumptions for the cyclical divisions, particularly for electrification and for digital solutions, if you can comment about the puts and takes into that guidance first?

Massimo Battaini: Yes. In terms of top line, we assume more than single digit growth, let’s say, in Electrification 3% to 5% and 5% to 7% for Digital Solution. I mean, this is volume wise what we see and the Digital Solution we should see some upside coming from prices.

Daniela Costa: And then in terms of margins, can you clarify like where Encore is right now? And I think in the past you have commented on what you saw sort of a fair level through cycle for Encore in the future. Have you changed on that and where does that number stand out?

Massimo Battaini: We had said in Encore Wire, the copper building wire, which is that of course the major cement of business they performed in the market, 3% to 4% price softening in November December, not in October, in November December. On the contrary we have seen aluminum building wire pricing going up, there is some volatility associated to the tariffs. We think we will benefit from the tariffs that has been applied to the aluminum material imports and also to the cable imports, since as you know in aluminum building wire space there is a 40% of the American market in the end of imports. So we should be able to capitalize on additional margin improvement in aluminum building wire. In building wire -- copper building wire, we had seen this slow momentum in the market. I think this was driven by the residential market not taking off and having more competition in the industrial market, which is where we are much more exposed to in terms of Encore Wire. So I believe it was 15% EBITDA margin in 2024 of Encore Wire. We might see some moderate and temporary slowdown in quarter one and with the second quarter with a high season and with a strong expectation that we received from all customers in terms of growth in 2025. We had met in the last two weeks dozens of customers to try to gauge and understand what the view is and the prospect is for 2025. They were all positive about a dynamic market with a lot of additional demand. So this softening is definitely temporary and we should be able to stabilize ourselves to a fourteen-fifteen percent level in the high season quarters of 2025.

Daniela Costa: Got it. Thank you. And the final one, just before you had commented in terms of liking to strengthen potentially inorganic the digital solution business with sort of a stronger offer for data centers and connectivity. And I was wondering if recent sort of developments in that market with DeepSeek and other news flow have shifting you’re thinking about there in any sense and where that’s been. Thank you.

Massimo Battaini: No, we did not change anything, although we don’t apricate if every time there is bad news in data center of our stock price drops as if we had 100% of our revenue as opposed to data center. We still have only -- I mean or maybe not only, but we have 5%to 8% revenue as opposed to data center, potentially with some growth happening in the coming years due to the expansion. We haven’t seen any slowdown in data center expansion. We can, as you well know Daniela, benefit from data center expansion across the fourth summit of business because also in transmission, we receive projects and we participate to tenders for a little finer data center with renewable energy. So for us it’s a strong use case which do justice to our synergistic portfolio, Transmission, Power grid, Electrification, Digital Solution. We will continue in pursuing M&A activity in other business, looking for complementarity. In telecom as you correctly said that we would like to become even more exposed to the connectivity components, not necessarily to the data center but to the fabric to the home and part to the data center but to the connectivity components so that we can offer really a comprehensive solution. Cable optical fiber cables and connectivity.

Daniela Costa: Thank you very much.

Operator: Thank you. We will now go to our next question. Please stand by. And the next question comes from the line of Josh Miller from Morgan Stanley.

Josh Miller: Just maybe first question on the medium voltage business power grids. I think you’ve now mentioned a 12% to 13% margin level for 2025, which is clearly lower than 2024’s 13.4% level. I guess my question is, how do you feel about supply demand beyond 2025? Because you and competition have brought more capacity online, you will be bringing even more online at the end of this year. I guess, what gives you confidence that this is the end of any potential market normalization in that segment?

Massimo Battaini: You know we had a significant surge in margin in the space in 2023, 2023 and partly -- and also 2024, coming from a market that was tight, capacity was not yet fully deployed and the demand was strong. Now, the demand is going to remain strong in 2025 because the drivers for additional electricity needs will insist in making investment in the power grid, which is the asset delivers more electricity to the users, remain solid. The point to your project said is that now there is more capacity coming on stream. But on the one hand we have a stronger relationship with key customers, so most of this capacity coming on stream is for public power space or renewable onshore business, where you don’t have -- and you don’t need to have a long-lasting relationship to be a player. On the contrary, we have 50% of our business -- 50% to 60% concentrated in utilities. So the wrong relationship with these utilities customer and the good service that we keep providing them in terms of security supply on time delivery is what they reward a lot. So on the one hand there will be additional capacity which I believe will be more redirected to onshore business, which is a spot project business and more redirected to public power. Public power is the kind of distribution space for the power grid. And while we will continue leveraging our long-lasting contracts and frame agreement with the utilities. I said 12% , 13% because anyway with the additional capacity despite incremental demand, we might see some pricing adjustment. So far we haven’t seen that. So not at all negative, actually positive. But bear in mind that the 2024 was a record year with this 13.4% EBIDTA margin.

Josh Miller: Thank you. Do you think 12% to 13% is the right level for this business? Just to clarify.

Massimo Battaini: What could be the right level for this business 12%, 13% is the right level. I mean, we were 7%, I said. We consolidated a stronger comfort because of the market demand is there. The additional capacity will create some maybe milder moderate turbulence in the market, but not with our customers because of what I said before. So 12%, 13% is what we expect to achieve to remain to see in the coming years, not necessarily only 2025.

Josh Miller: No, that’s great. Thank you. And then maybe one just quick second question. Just sort of announcement in December, I think, around the U. S. capacity expansion Brayton Point that sounds like it’s now being shelved. I guess maybe a couple of questions on the back of that. Could you just remind us about how big that was going to be all in? I guess now what your intention is for that CapEx, is that being reallocated to other capacity expansion projects? And then I guess on the back of that all in, how do you think about revenue capacity on a three-year view 2027, 2028 that transmission business?

Massimo Battaini: Yeah. So the big investment was kind of big. It was €450 million for one additional line. So €400 kilometer of a submarine capacity all devoted to United States. First of all, the reason why we decided to originally to pause and then to basically call off that investment was not -- has nothing to do with the political situation with Trump, but has to do with what didn't happen in the last three years. So the demand in terms of order intake in Submarine, in HVDC land didn't happen, didn't gain any interest in North America. Again, during Biden, as well during Trump before, as well during Trump now. So the decision is that let's not create for us a difficult situation whereby we have an asset, very expensive, for limited capacity and we have to run it idle because we will not have the chance to saturate it. Or even worse, to use a project from Europe, load into North America and then to repatriate it for to Europe because the North America demand is not there. Of course, we already made a partial use of this CapEx because in the last, 12 months, we decided to expand additional capacity in Europe, which will come, available by the end of 2026 in submarine space and the HVDC space. Because the demand in Europe remained pretty solid and actually growing And, in order for us to remain the market leader and maintain our ambitious 35% to 40% share of the market, we needed to expand capacity where the market is, where the customers that we trust are TSOs in Europe. The backlog we have is, large enough to cover revenue through 2028. So we are fully sold out despite the additional investment I just mentioned. And it goes actually beyond 2028. So I don't see a great deal of concern in European growth plan through 2028. Backlog is there, the capacity is undergoing, the backlog is reliable because it's with a solid project, with solid customer, but with solid customer, with project backed by notes to proceed and down payments. So we feel pretty confident that we deliver the growth that we said we would achieve and we'll do more. We'll tell you more at the Capital Market Day and also the EBITDA margin enhancement that we're committed to achieving.

Josh Miller: Great. Thank you very much.

Operator: We will now go to our next question. Please stand by. And the next question comes from the line of Miguel Borrega from BNP Paribas. Please go ahead. Your line is now open.

Miguel Borrega: Hi. Good morning, everyone. Thanks for taking my questions. The first one, just on electrification margin during Q4, which is down year on year, despite the integration of Encore. Can you share additional color here on the weakness and give us some thoughts on whether your initial expectations from Encore still stands? I would imagine synergies are progressing well, but what about the underlying business on a stand-alone basis? I remember you saying margin could be sustained at 2023 levels of 20%. Can you tell us roughly how much that was in 2024?

Massimo Battaini: Yeah. So the EBITDA margin of the acquisition and actually what we reported in quarter three was 15%. Basically, we lost one point more or less in quarter four over 2024 quarter three. The reason why quarter four 2024 is margin wise lower than quarter four 2023 as also to be identified in other parameters. We had a particular situation very positive in LatAm in through the whole quarter of 2023 due to the due to the I mean kind of panic buying from customers in Argentina where cash were short, they wanted to find a place to put money and protect and shoot money from inflation and deflation. So they to buy cables and copper and a lot of stuff. So there are specific spike in quarter four 2023 in LatAm, which make the comparison between '24 and '23, unfortunately, unfair. So margin of Encore sits on a 14% EBITDA and, before synergies. And we think at this level between 14% and 15% is going to remain. Of course, quarter one it didn't start -- a starting kind of continuity with the quarter four, so we had seen the same type of pressing -- spinning in copper building wire in one space, but demand has remained solid. The weather, as I said before, didn't help at all. New project didn't start in light of this difficult weather situation. Synergy will add €140 million. We are moving fast on synergies. Of course, last year there was just some fixed cost synergies -- minor fixed cost synergies. This year is where we are to deliver cross selling opportunity and operational efficiency, operational synergies. Synergy will not necessarily add the margin points per se incremental EBITDA margin point per se, they'll add additional revenue with a margin that has to be identified. So all in all, I believe that we're still pretty confident about the sustainability of the margin in Encore Wire and the I&C space in the industry.

Miguel Borrega: That's great. Thank you very much. And then on Transmission, can you update us on the ongoing capacity expansion? You said just now existing capacity will be done by the end of 2026 and you confirm no longer a U.S. plant. I remember you announcing this sometime in 2021, and that was supposed to add €1 billion of sales by '26 to €4 billion. So without that, can you confirm again your revenue capacity once the existing plants are done by 2026? Is it roughly €3 billion? And what are the implications of not doing the U. S. plans in terms of your backlog? Does it imply further additions down the line? Is your margin expectation still 16.5% by '26? Some color on that would be great. Thank you.

Massimo Battaini: Okay. Miguel, thank you. I will not be able to answer the questions. We are a few weeks away from what I can tell you much more, with more in-depth in in at the Capital Market Day. First of all, the end of the capacity expansion is not '26. It's going to be towards the end of 2027. So we will see the full available capacity turn into revenue in 2028. Our revenues will grow significantly from 2024 through 2028. I will just you that we decided that years ago to double the submarine capacity and increase significantly also the HVDC land capacity. So let not be spurring out the capital market there with a number for Transmission revenue in 2028, but will be consistent with a stronger organic growth through the period. The capacity that we're going to lose on the back of the decision not to continue with Brayton Point is going to be more than offset by incremental capacity that we will make available to Europe. The 2026 that you mentioned is additional lines that were not part of the original plan but will be coming available in Europe by the end of 2026, early 2027 and they will overcompensate the lack of the 400 kilometer not included any longer in the American footprint. Margins will go in our, maybe I should not again tell you anything about it, but margin will go beyond the 16.5% that we committed to at the last Capital Market Day.

Miguel Borrega: That's great. And then lastly, just, can you shed some color on the CapEx expectations for 2025 and 2026, if you might?

Massimo Battaini: The CapEx will, continue in 2025 in line with the level of 2024. And there will be also similar number, slightly lower in 2026. This simply related to the fact that with those two years 2025 and 2026 we'll see two additional vessels coming available on us. So the Mona Lisa delivered in quarter one and there would be Alessandro Volta new vessel delivered at the end of 2026. Beyond that level -- beyond that moment, CapEx will marginally reduce because we're coming to an end -- we're coming to the end of the wave of CapEx to expand manufacturing capacity, investor capacity in vessel capacity’s transmission.

Miguel Borrega: Thank you very much.

Massimo Battaini: Thank you, Miguel.

Operator: Thank you. We will now take our next question. Please stand by. And the next question comes from the line of Akash Gupta from JPMorgan. Please go ahead. Your line is now open.

Akash Gupta: Yes. Hi. Good morning, Massimo and Francesco, and thanks for your time. I have a few as well, and I will ask one at a time. The first one I have is on solution revenue growth in 2025. I mean, we have already seen very good growth in 2024 and you said that some capacity expansion has helped the growth in Q4. So maybe if you can talk about which are the new capacity, like where is it coming from in 2025, to quantify the magnitude of it? And also when in 2025 these things will come in if we have to distribute our revenue forecast into four quarters? So the first question on, solution growth and capacity expansion.

Massimo Battaini: So solution is, your name for our transmission is NKT name for our transmission. So transmission

Akash Gupta: So yes. I mean transmission, high voltage.

Massimo Battaini: Don't worry. We like to be associated to NKT. It's a good play. So revenue growth in '25, yeah, I should give this number to you at the Capital Market Day, but there would be one additional line in Naples, in our plant in Presov, for a submarine volume. And, there will be water that's already come, ready to production at the end of quarter four 2024 in Douvrin our plant in France for HVDC land. And there will be one small, catenary line for submarine production also in Pikkala. So overall, I would say that if you take the revenue of 2024, you should apply, let's say 15%, fifteen % to 20% revenue growth as a result of manufacturing capacity which goes end in end with the additional installation capacity associated with the CapEx that as you mentioned before.

Akash Gupta: Thank you. And my second question..

Massimo Battaini: No. I was just saying, I hope I clarify this this scenario for transmission.

Akash Gupta: Thank you. And my second question is on your margin expectations for 2025. I think in your prepared remarks and afterwards, you talk about margin expectations for various segments. And one of the variable in your margin is metal prices, given you don't adjust your margins for metal prices like your peers do. So anything that we should expect from metal prices that you may have embedded in your margin expectation that you communicated earlier? Or are these based on same metal prices?

Massimo Battaini: I consider metal prices in continuity with the level of 2024. Of course, there might be some changes resulting from the tariffs, not on the LME price but on the other components. So the transformation cost, the cutoff premium and the stuff. And I think, I mean in North America we still have to understand what would be the end is -- what will be the end of this game. As said before, the whole of North America is not self-sufficient in terms of rod -- copper rod, aluminum rod production. So those import duties applied to metal prices will not certainly favor the local capacity which is still not aligned to the local demand. And so, this will end up providing all the oil market an increase in cost of cables and so on, which is I think, is something that we normally benefit from because we can pass more than inflation to the market. So anyway, our margin expected by business unit do not reflect any of these possible changes. Also because we think we'll be able to remain immune if not benefit from the import duties applied to importing North America.

Akash Gupta: Thank you. And my final one is for Francesco. And so Francesco, you talked about, purchase price amortization was among the items that, that had played role in below the line items. Can you quantify how much was PPA impact in your adjusted EBIT? And any color on what shall we expect in 2025?

Pier Francesco Facchini: Yeah. I give you a picture of what was the impact on the profit before tax, which means basically an impact on the EBIT more than adjusted EBIT. I try to be clear. Let me start from the profit before tax and the net income. So we had basically a PPA effect of, I said €80 million actually €77 million to be to be exact. €37 million say €40 million to round it up is additional depreciation which is coming from the reassessment of gas, which is typical of the of the PPA and another €40 million is coming from the reversal of the inventory step up but in all the PPAs you have an inventory step up according to market value of this inventory and then you reverse this extra value typically in the first quarter right after the acquisition. So basically €80 million all in all. Then let me also add that our profit before tax was penalized by some impairments. A question was mentioning the basically point related to the Brayton Point investments. We impaired some of these -- some investments that we had done -- some costs that we had done in 2024 and with other small impairments the total effect is in the region of €40 million of impairments. All these is a penalizing the quarter four to be exact. So we have total negative effects from PPA and impairment on quarter four of €120 million. The net of tax are effects of €90 million. So basically, you should read the quarter four profit before tax and net income considering this negative impact of €90 million. And if you consider this our Q4 net income would be absolutely in line with the two central quarters of 2024. Talking about specifically the adjusted EBIT, the additional depreciation from PPA is included in is not excluded from adjusted EBIT, is penalizing adjusted EBIT. We are rigorous on this. I don't like, frankly speaking, to say that, you know, extra depreciation from an acquisition we should exclude the depreciation of adjusted EBIT. In my opinion would not be very serious. What is excluded on the other end from adjusted EBIT is the reversal of inventory step up, the €40 million that I was mentioning, because this is a one-off effect, it's not whereas the higher depreciation from PPA is not a one-off effect, it's an effect that we will see also in the coming years. By the way this year was only one half, next year will be for the full year different is the reversal of the inventory step up. Okay, I don't know if I'm clear. I was clear.

Akash Gupta: For 2025 we shall expect somewhere around €40 million in PPA.

Pier Francesco Facchini: In 2025 you should expect additional depreciation in the region of, yes, €35 to €40 million. Because these €35 million to €40 million that you had in 2024 was only one half of, PPA.

Akash Gupta: And I mean PPA is a number that a lot of investors add back in their valuation given it's a non-cash amortization coming from step up value. So if you have to take full year number that would be around €70 million to €80 million that is that will be included in your adjusted EBIT for 2025. Is that clear?

Pier Francesco Facchini: Right. €80 million, I would round this up to €75 million to 80 million correct of additional depreciation related to PPA fully 2025 is a very good estimate.

Akash Gupta: Thank you, Francesco.

Pier Francesco Facchini: Welcome.

Operator: Thank you. We will now take our next question. Please stand by. And the next question comes from the line of Monica Bosio from Intesa Sanpaolo. Please go ahead. Your line is now open.

Monica Bosio: Good morning all and thanks for taking my questions. I will ask one by one. The first is on the transmission side. Most of my questions have been already answered. But could you share with us, Massimo, the expected size of the Transmission market in 2025 and 2026 with a breakdown between connection and submarine. And, just one curiosity, the company is going to add the two new vessels. So the installation capacity looks to me very -- like pretty good. How is the situation at the market level in this moment? That's my first question.

Massimo Battaini: Thank you, Monica. So the expected size of the market in 2025, 2026, based on the pipelines of projects that either we already bid to or we are seeing as coming tenders is between €15 billion and €17 billion per year. There are still some frame agreement or large projects to come into fruition like the National Grid projects. Then there are projects for Frontera for the so-called Hyper Grid, so it's a larger network, summary network surrounding Italy. There is the frame agreement from IPTO, the Greek company. So that project in the pipeline which make us comfortable saying that €15 billion, €16 billion is the land market in 2025, 2026. The market is more or less 70% towards San Marino and 30% in land HVDC. Maybe one additional comment that why in the past we had this longer interconnector -- land interconnectors, those land interconnectors large as long like the German core will probably not be continuing with the same intensity in coming years. But more and more we see submarine offshore business with stronger and longer stretches of land when it comes to shore to connect to substation that are much more remote than they were before. So a lot of land activity is actually combined in the submarine project because of the distance between the shore and the substation there to connect to. So, overall the land that we represent, as I presented in the past, the 30% of the full bulkhead. We are unique in the new in terms of installation capacity because we are the only one able to install with our vessels all the cable that we produce. So we don't like to resort to third party installers. First of all, for cost reason. Today the market is very buoyant and the price per day of vessels, charter from the market is 3 times the cost - 3 times the price that it was only 2, 3 years ago. And this is one economic reason -- convenient reason for us to say we want to maintain this margin within ourselves. But the main reason is probably the quality and the risk of installation. We want to control the quality and the risk of installation. So we don't want to depend on anyone else in terms of time extension, bad weather standby also because our vessels can really perform this installation, not because we are good, but because we designed them with the best capability to withstand waves, current, winds in worst condition to avoid and we had to cut the cables and walk away if storms arrive. So there are a lot of technical reason and installation capabilities is one of those for us to justify our strategy, which is different from the every other player in this space.

Monica Bosio: Very clear, Massimo. Thank you. And my second question is on Digital Solution. Which are the main parameters you are going to look at when and if the company will decide to grow externally in Digital Solution? Could it be the sites -- aside on top of the geographical positioning, Could be the sides, the margins, the multiples on the EBDITA. Any colors would be useful on this side. Thank you.

Massimo Battaini: Yeah. I mean, first of all, it is not that we have, hundreds of targets available in telecom M&A. And so we have also to -- that said that we work on different scenarios. The main driver behind this M&A is as said before the complementarity of the portfolio. So to make us a real solution provider in optical, we already have a lot of solution in our optical space. We have a significant revenue in connectivity but we think that by expanding revenues in connectivity we can play the role of providing solution to a market that is more demanding. And in terms of pricing upside, if you sell the whole package there will be some upside. And then company that we're looking at cannot be a huge company because we cannot perform another Encore Wire like acquisition until, 2027, let's say. So it would be with size acquisition. And so we look at the size of EBITDA, the sustainability of EBITDA, the multiple that we pay with the price has to be the right one. We would not pay a multiple of 10x the EBITDA or even worse, 12x or 15x. And so these are the parameters that we are looking at and we'll continue with this activity and maybe we'll tell you more the capital market about how we see there's opportunity moving forward.

Monica Bosio: Thank you, Massimo. Now my last two questions. One is on the specialty side. Is the company maybe mulling some reorganization sort of disposal within the specialty space? And the very last one is for Francesco. Should we expect the free cash flow by year end to approach the top end of the guidance, thanks to Transmission? And, could you just please give us some indication on the Forex impact in 2025 on the operating trend? Thank you very much.

Massimo Battaini: So specialties, no, we don't have in mind any particular organization. We're just gradually disposing parts of the automotive business because it's separate not court wise, it's actually not providing any business upside. On the contrary, thanks to the consolidation of our organization that we already implemented, turning the four European region into one single Europe, one single region, we can count on, intercompany flows that will become now inside the regional -- inside the region flows. So making the region more focused on pursuing, growth opportunity specialties where before we had pockets of regions with great upside, with great traction in the market and other that didn't benefit from the global footprint Europe. So no reorganization beside the one that we applied with the consolidation of Europe and as a pack and, chance to gain more traction in specialties especially in Europe.

Monica Bosio: Okay, got it. Thank you, Massimo.

Pier Francesco Facchini: Hi, Monica. Thanks for your question. Well, for the time being I would say that having provided a guidance of free cash flow between €950 million and €1,050 million. I confirm that the midpoint is the one that you have to look at and that I think is more realistic. Of course, I don't exclude that we will be able to be also in the highest part of this guidance but for the time being it's very early in the year and my suggestion is..

Monica Bosio: Fair enough.

Pier Francesco Facchini: Yeah. And maybe just to explain a little bit better, the reason of the stability, substantial stability of our free cash flow is that whereas we have a significant progression our cash flow operations before working capital changes which is driven by EBITDA by the way it's driven by reported EBITDA where you have the very good growth embedded in our guidance but you have also a decrease -- an anticipated decrease of our restructuring and adjustments so we have a very strong impact. But this kind of offset, let me simplify, by the very powerful cash-ins -- by the very strong cash ins that we enjoyed in 2024 which are related with the down payments of the Transmission business and some of these down payments were actually related to frame agreement awards which had taken place in 2023 as you well remember the huge market awards which came in 2023 most of the collection of down payment collections took place actually in the first half of 2024 and so it's a matter of fact that even if we anticipate a strong market in transmission in 2025 the level of down payments will be barely one half of the one that we benefited of in 2024 and this is the offset of the of the and then a lot of other details that I don't lose your time with.

Monica Bosio: Thank you very much, Francesco.

Pier Francesco Facchini: Welcome.

Operator: Thank you. We will now go to our next question. Please stand by. And the next question comes from the line of Sean McLoughlin from HSBC. Please go ahead. Your hands are open.

Sean McLoughlin: Thank you. Good morning. A couple from me. Firstly, just on Specialties, I just want to understand a little bit more the dynamics of the margin decline. I mean, I see that automotive is less than 20% of total exposure of specialties. So could you maybe talk about specific conditions, deterioration within automotive? And should we assume that everything else across OEM renewables, oil and gas elevators, etc., is stable? Or are you seeing a broader impact? That's the first question.

Massimo Battaini: Thank you. No, yes. Automotive is the biggest chunk of this specialty deceleration. It is relatively small, but the margin was decent -- has been decent in '23 in the first half of 2024 with a bit of a worldwide crisis. With a bit worldwide crisis, we suffer from loaders, saturation, excessive transportation costs because the market has become more complicated. To be honest, there is also as I mentioned in elevator in North America, which is a kind of profit of business, a significant slowdown due to the residential market impact. As far as the understanding is concerned, all the rest is pretty much the same. Yes, there are plenty of verticals in the OEMs renewable space. One is up, one is down and one is down. We don't have any particular trend in any of these specific verticals. Of course, it looks like we suffer a lot in terms of seasonality over the last quarter starting from September 2024 in terms of volume and across all verticals. But the real impact in terms of EBITDA margin reduction came from these two segments automotive and elevator.

Sean McLoughlin: Yeah. And should we assume in fact, I mean, is there something abnormal about this seasonality or should we expect every year kind of a Q4 slowdown?

Massimo Battaini: I think this has nothing to do with the calendar seasonality. In '23, quarter four we had good performance in special cables. So it is more about the pace of investment of OEMs, renewable and auto multiplayer than the season per se. In the last quarter, the last four months of '24, we noticed a reduction of volume, definitely across automotive, with implication prices and all the rest and elevator, but we should see -- we enter actually in 2025 with more stability. And, so we believe that, as we noticed last year, we had a bit of a spike in margin on this business, the margin of this business in quarter one. Quarter two, a level of 10.5%, 11% is what we consider more sustainable moving forward.

Sean McLoughlin: Thank you. Second question is just coming back to Monica's question and just probing a little bit on the guidance range, this time for the adjusted EBITDA. I mean, is it fair to assume that if we do see this pickup that you've talked about in the U.S. from, let's say, March onwards that the upper end of that guidance range is realistic?

Massimo Battaini: Sean, it's really very early. As I said, we enter in '25 with some continuity vis-a-vis what we've seen in November, December in the Electrification business unit in terms of I&C margins. I think there is a lot of negative impact coming from the weather because many investment -- many constructions didn't start. So we'd like to reserve our right to tell you more about this at the end of quarter one when we see the actual result of quarter one when they want to end and we have better visibility of the demand of the backlog that is going to help us in quarter two and quarter three. So, there is some volatility as we speak. There is also this import duties situation that is unfortunately not yet clear as to what is going to be the impact, whether it's going to hit level one, whether we'll be able as we're doing it to expand the current import duty also to cables. In some cases, already administration consider cables as part of products coming from a side that will be charged within producers, in some cases not. So, there is still a lot of clarification as swapping before we release more comfort on which portion of the range we're going to hit.

Sean McLoughlin: Right. Thank you, Artemar.

Massimo Battaini: Thank you, Sean.

Operator: Thank you. We will now go to our next question. Please stand by. And the next question comes from the line of Lucas Ferhani from Jefferies. Please go ahead. Your line is now open.

Lucas Ferhani: Just a follow-up on, on specialties, where you see the weakness. So for 2025, you're guiding to kind of low single digit organic growth in Electrification, I guess, the entire segment. But what would you see for Specialty? Do you see some recovery, some stabilization or should we see another kind of down year into 2025? And then am I right to you said the kind of sustainable margin for that business going forward is more 9% to 10% EBITDA margin? Thank you.

Massimo Battaini: Now for specialties, we see also some recovery and sustainability in organic growth. Of course, single digit margin -- a single digit organic growth. The margin that we expect to maintain is the 10.5% that we see in 2012 and we are going to see in '25. So 10.5%, 11% is the margin that we expect to achieve in specialties in 2025.

Lucas Ferhani: Perfect. Thank you. And then just on Transmission, the comments regarding growth in 2025 from the additional capacity, I think you said revenue growth of 15% to 20%. Is that kind of volume on me or could you have a pricing impact as well, kind of helping further that growth? And also, I think you said you're comfortable confident on the 16% plus margin in 2025. Just trying to think about the margin potential for that business looking into kind of '26, '27, and I know you'll discuss that at the CMD, but you're still delivering projects that were not fully reflecting maybe inflation. And so incrementally, the projects you're going to deliver in '26, '27 should have kind of better pricing margin. So how do you think about the margin potential you know, beyond 2025 in that business?

Massimo Battaini: So Transmission, gross in '25 net year, I reported 15% to 20% is a combination of volume and price. Is a combination of volume because the additional capacity will help us deliver more projects, both the manufacturing and installation capacity is a combination of price because, as said, we will hit a 16% plus EBITDA margin in 2025 and most of this upside uptake in margins comes from projects with better margins, so with better price in our backlog in execution in 2025. Then since we will continue expanding our size and we have also some operational leverage and we will also have a better margin projects. In 2026, 2027 we do expect to have to go beyond the 16% plus EBITDA margin that we will deliver in 2025. And, but again, I would like to give you more about this, the Capital Market Day.

Lucas Ferhani: Perfect. Thank you.

Massimo Battaini: Thank you, Luca.

Operator: Thank you. We will now go to our next question. Please stand by. And the next question comes from the line of Alessandro Tortora from Mediobanca. Please go ahead. Your line is now open.

Alessandro Tortora: Yes. Hi. Thanks. Good morning to everybody. I have three questions. Quick question. Okay. The first one, I remember in the call, the comment that you gave on the aluminum tariff. Can you also elaborate a little bit on the recently announced possibility to have also a tariff on copper and which kind of implication there for you? That's the first question. Thanks.

Massimo Battaini: Yeah. They work pretty much the same. The aluminum tariff, going to be applied to import aluminum from Canada and from other countries and, for Canada will be 25% heat on top of the aluminum cost and from other countries will be moving from 10% to 25% so an incremental 15%. This is I mean, an impact common to the entire industry. There are other big player in the United States like Southwire. We all depend from local production, very limited and most of our aluminum rod comes from imports from Canada or from Middle East and other countries. So this aluminum target will impact the total industry and will play in the same way passing on this price uptake to cost uptake to the market. Rodder is a bit different because USA is less reliant on import of rod than it is on aluminum. So there is some significant local production of rod in United States but still there is something that has been imported from other regions. So, I think what is important will have the same impact to our industry. So the cost will be added to the [Technical Difficulty] cost and the cost will be passed on to the market because it's common to the entire industry. Where there is there is a differentiator, which is what I mentioned before in the aluminum tariff will also be applied into cables imported from other countries in United States. And this is where we're going to have a help because, 40% of the aluminum building wire market is in the end of importers, which will be more penalized because the tariff will be applied to the entire value of the cable and not to apportion on it like the aluminum rod. So this will make us gain some marginal improvement due to the differential costs between our internal production and the cost of aluminum -- and the cost of our aluminum product imported from abroad.

Alessandro Tortora: Okay. Thanks. Then the second question is, considering your free cash flow guidance range, let's take the midpoint. Can you help us also do reconcile a little bit what this would mean for the net debt EBITDA target for this year starting from around 2.0 you got this year. Thanks.

Pier Francesco Facchini: Yeah. You should consider the dividend that, by the way, we just proposed to the EGM and let me try to give you an indication. Give me a second. In terms of realistic level of debt. Bear with me for a second, please.

Alessandro Tortora: Yes, thanks.

Pier Francesco Facchini: Here it is. I think a realistic level of debt is in between €3.7 billion and €3.8 billion. I would say consistently we are €100 million range of the guidance. I would say €3.7 billion and €3.8 billion.

Alessandro Tortora: Okay. Thanks. And then..

Pier Francesco Facchini: Actually, you can calculate it by yourself.

Alessandro Tortora: Yes. Yes. I can try. I can try.

Pier Francesco Facchini: You can try.

Alessandro Tortora: And on if you can also add a little bit also on the tax rate considering, you know, the one off with all this year and also last year on financial charges for 2025. Thanks.

Pier Francesco Facchini: Yeah. No, that's very simple. The tax rate, I think, is a fair assumption for 2025 and also for the next few years is in the 27% so this means that the one off that we had in 2024 were worth approximately 3.5 points. Give me a second also for the financial charges, you should consider of course that the effect of the acquisition will be a full year effect next year. So my best projection is in the region of I would say €260 million for next year between €250 million and €270 million. So take an average of €260 million. They, so an increase which is not huge, by the way, compared to 2024. We are already at €225 million. Cash wise is a bit different if, just to complement because the increase in interest expenses paid in 2025 versus 2024 is more than these €40 million on the P&L. The €4 million is from 2025 to 2026, so say €35 million. I would say it's more or less double. So say €80 million. The reason is there is the difference between of course the cash interest and the accrued interest which plays a significant role in the acquisition financing.

Alessandro Tortora: Okay, Thanks.

Massimo Battaini: Welcome.

Operator: Thank you. We will now go to our next question. Please stand by. And the next question comes from the line of Xin Wang from Barclays. Please go ahead. Your line is now open.

Xin Wang: Hi. Thank you for taking my questions. My first one is on the 12% to 13% margin. You commented, so I think we understand the supply demand dynamics you were, explaining. But I'm just wondering, is this 12% to 13% coming out of, initial conversations with customers on either new frame agreements or frame agreements renewals? Has the duration of frame agreements that is to be signed for the additional capacity, changed.

Massimo Battaini: Thank you, Xin. No, the yes, we had constant conversation with customer about the market expectation volume was in 2025 and 2026. You know, there are those frame agreements are rotated. There are frame agreements that are due to expire in quarter two and are due to expire in two years. So, they are normally over three, four, five years duration and time by time we have, some of them that needs to some go out for extension because they're happy with the service, they're happy with the current supplier and some, then go out for the for it handling. So it is more about the 12% to 13% view is more in line with the fact that there is additional capacity in the market. It is difficult now to gauge whether where what the imbalance would be in '25 between this additional capacity and incremental demand. So should additional capacity maintain, the type of imbalance which we had in 2023 and 2024, of course we will see a stabilization at 12%, probably at 13%. But on the contrary if we have a different situation between capacity and demand, we might see some pressing pressure, not in as much as in utility space as I said before, but in the power grid, so distributor space and renewable onshore business, which is, I said, a spot business that goes on a project-by-project basis.

Xin Wang: Great. That's very clear. And then I also want to follow-up on metal prices. I think you touched on this earlier already. So understood regarding the aluminum imports. But earlier this year, we also saw, CME copper price now adds a premium to LME price. I think you were seeing the same. So in copper price inflation in the past, we normally see cable makers can make outsized gains. Could this be the case in 2025, if tariffs materializes exacerbating this copper price premium?

Massimo Battaini: I think, you're correct. Normally, when those prices go up, premium and transformation prices, you get some you get some upside the market provided they didn't go up too fast. In that case, it's it takes a while to catch up with a new price. I think that the tendency is that the aluminum and the copper price will go up in '25. And assuming a moderate and stable growth, we will be able to leverage this growth to make increase in margin. I think the market demand will play also an important role in this balance between cost of material going up and ability to pass on to the market. And as far as demand is concerned, we haven't seen any of our customers concerned about a possible rebound -- a possible negative downturn on this demand. They see the industrial cables demand going up 3% to 5% and they also spend the words about the possible mild recovery of the residential market, which also will contribute towards the overall growth of the Electrification business in United States in 2025.

Xin Wang: Great. Thank you very much. My last question, goes to potential for shareholder distribution. So with very strong cash generation and forward guidance also a very strong beat to consensus expectations at midpoint. Would you comment on opportunity for shareholder distribution? Can we expect another buyback as the current program is being finished?

Pier Francesco Facchini: Yeah, thanks for the question. For the time being, as we said, we propose an increase in dividend, a 14% increase in dividend. You know that a buyback, the share buyback is ongoing as we speak. It is the one that we had announced, in, June for a total of €375 million. In 2024, we completed approx. Approximately €325 million, if I remember. So the €50 million remaining part is ongoing and will be most likely completed by the end of the of the first quarter. Let me say on the general topic that's a matter that in the end boils down to capital allocation priorities and we'll come back to you in the Capital Market Day New York. This will be a specific chapter of that presentation.

Xin Wang: Great. Thanks very much.

Massimo Battaini: Welcome.

Operator: Thank you. We will now go to our next question. Please stand by. And the next question comes from the line of Chris Leonard from UBS. Please go ahead. Your line is open.

Chris Leonard: Hi there. Just, two very quick questions from me. Thanks for taking the time. I think you commented previously at the end of 2024, you'd make a decision on that medium voltage expansion in the U.S., whether or not you're going to add more. I just wondered if you could speak to any decision there. And the second question is around that dual listing decision. I might have missed it as well or not. You've spoken on it earlier in the call, but if there's any elaboration on your process here and what we should expect on timing. Thank you.

Massimo Battaini: Thank you, Chris. Medium voltage expansion in U.S., we are assessing it as you speak. We are close to making a decision. There will be certainly some medium voltage expansion in U.S., probably more twisted towards the industrial construction space, industrial construction buildings rather than utilities. But of course, it will be also fungible for the utility space. The discussion we're having is about the size of the expansion, not the rationale behind the expansion per se. U.S. listing is also a running assessment, running the size. We are finalizing those consideration, the pros and cons and soon we will have a view that of course we will share with you and probably we'll share this view either direction to do it or not to do it at the next Capital Market Day.

Chris Leonard: Great. Thanks very much.

Massimo Battaini: Thank you, Chris.

Operator: Thank you. As there are no further questions, I would now like to hand back to Massimo Battaini for any closing remarks.

Massimo Battaini: So thank you all and thank you for attending this moment. I invite you and hope you will come, to attend the Capital Market Day. It is in New York, so not really behind the corner for some of you, but of course it's a great opportunity to understand our new ambitions and to have more insight into our Electrification power in the United States that we're related to the Encore wire site. Thank you all and have a good day.

Operator: [Operator Closing Remarks].