Earnings Call: Q3 2025

Nov 17, 2025

Summary

9M revenue rose 47.8% YoY to $3.4 billion, while adjusted EBITDA grew 79.4% to $202 million excluding a $22 million legal-settlement gain. Backlog reached $8.6 billion; data centers and Middle East infrastructure underpin the growth outlook.

Good afternoon and good morning to everyone joining us today. Welcome to Orascom Construction's nine-month 2025 results call. This is Hesham El Halaby, VP of Investor Relations. We are joined by Ossama Bishai, our CEO, and Reham El Beltagy, our CFO. We will begin with remarks from Ossama and Reham, then open the line for Q&A. I will now turn the line over to Ossama. Thank you, Hesham. Hello, everybody. Good morning and good afternoon. We are here to share with you our nine months results for 2025. Other than the numbers, I think the most important event that we had is that the museum that we built was opened a couple of weeks ago. So we are quite excited and proud of that, and I hope you guys have the time to come over and visit. Going back to the results, I think what we have demonstrated so far is the company's ability to be flexible and adjust its compass towards the right target and the right business. We have indicated in the past, like in 2015 and 2016, that we are moving into the water. We said that a couple of years ago that we would like to see Egypt to become 30%-40% of our backlog, and actually this is happening as we speak. I think the bright story that we currently have is the fact that we have started working on data centers in 2018, and our U.S. subsidiary, Weitz, is well-positioned to grow exponentially on the back of the data center business and to deliver results on the top line and the bottom line to the whole group on the back of data center business. We have been able also to diversify our client base from working for one single client to become working for quite a few as we speak right now. Going back, we have a healthy backlog as of September 30, which is almost $8.6 billion. We are demonstrating higher revenue, which reflects the execution or progress on the project sites across all the geographic jurisdictions. Also, as we have always indicated, that we are focusing on higher quality projects that will generate better returns, and that is very clear from our nine months results. One also major event, now I cannot remember whether it was done in Q3 or after that. I think it is in Q3. We have finished our 650 megawatt concession, the EPC portion, six months early than scheduled. It will generate an additional six months of revenue, improving our IRR and improving the results, and we will probably make an earlier dividend to the investment company and the shareholders, hopefully before year-end. We are currently right now doing our wind assessment for a 900 megawatt, and we will obviously keep our shareholders updated with the progress there. Across the board, all the business units are performing. Obviously, it is a lot of project controls. It is a lot of challenges. It is a daily target that we are doing. But I think the results of this 9 months demonstrate the success of the whole team across our geographical areas, how they have performed. I would like to leave the floor to Reham to go through the numbers, and maybe we have more time to do Q&A after that. Hello, everyone. Going through our Q3 results, like Ossama highlighted, our backlog increased 8.3% year-on-year to $8.6 billion. In closing of this quarter, new awards, on the other hand, grew by 44.2% year-on-year to $3.7 billion for the 9 months of 2025. On the revenue has increased 74.8% year-on-year to $1.5 billion in Q3 of 2025, and 47.8% year-on-year to $3.4 billion for the 9 months of 2025. MEA Q3 revenue doubled year-on-year, driven by accelerated progress of high-profile projects from existing backlog across all major sectors. USA Q3 2025 operations also witnessed a steady growth of 33.8% year-on-year, driven by high contribution of newly awarded data center projects and other industrial and aviation projects. In Q3 of 2025, EBITDA increased 89.7% year-on-year to US$84.6 million, reflecting a margin of 5.7% from 5.3% in Q3 of last year. The increase in Q3 2025 EBITDA is driven by improved operational performance across both MEA and USA. 9 months 2025 EBITDA reached $224 million at 6.5% margin, compared to $112.6 million for the 9 months of 2024 at a margin of 4.9%. 9 months 2025 EBITDA includes a $22 million net gain related to overall favorable settlement of legal cases that took place in Q2 of 2025. Excluding this one-off, 9 months adjusted EBITDA increased 79.4% year-on-year to $202 million, reflecting a margin of 6%, well ahead of 9 months of 2024. Adjusted MEA margins would also reach 7.9% for 9 months of 2025. In Q3 of 2025, BESIX added US$8.7 million to the group's net profit, up from $5 million in Q3 of 2024. The total contribution of BESIX for the 9 months 2025 reached $21.9 million, compared to $13.3 million same period last year. For our concessions across wind farms and wastewater treatment, contributed 7.9% of total net profit in 9 months of 2025, highlighting the early commissioning of the 650-megawatt wind farm in Egypt that Ofema flagged earlier. Our subsidiaries across building materials, equipment services, and facility management accounted for 10.9% of net profit for the first 9 months of 2025. In terms of net profit for Q3 2025, it increased 2.3 times compared to Q3 of 2024, reaching $50.6 million, with a margin of 3.4% compared to a margin of 2.6% in Q3 of 2024. Nine months 2025 adjusted net profit, excluding the $22 million gains mentioned before, increased $27.9 million year-on-year to $111.3 million, compared to $87 million for the nine months of 2024. Moving on the balance sheet side. Our equity accounted investees amount to $2,537 million. This is majorly denominated by BESIX for $457.7 million and also $51 million related to our wind investments. The group total equity increased to $782.2 million closing September 2025 from $647.5 million a year earlier, primarily driven by net profit for the period. Trade and other receivables increased to $2 billion, compared to December 2024 level of $1.4 billion, reflecting the growth in revenue and progress on billings and advance payments to suppliers and subcontractors on our large projects in the MEA region. Trade and other payable balance increased to $2 billion, compared to December 2024 level of $1.5 billion, reflecting again the increased volume of work. Our gross debt stood at $450.7 million as of closing of September 2025, compared to December 2024 level of $313 million. However, it is worth highlighting that the gross debt was reduced by $160 million during the month of October of 2025. The group generated healthy operating cash flow this quarter, maintaining a net cash position of $839 million closing September, compared to $728 million in December and $676 million for quarter two of 2025. I now hand back the call to Hesham to open the Q&A session. Thanks. Thank you. Ladies and gentlemen, we will now begin the question and answer session. At this time, I would like to remind everyone in order to ask a question on the phone lines, please press star followed by the number one on your telephone keypad. If you would like to withdraw your question, simply press star one again. You may also ask your questions via the webcast page using the Q&A button on your screen. We will pause for a moment to compile the Q&A roster. Thank you. At this time, we have no questions on the phone lines. I will turn it over to Hesham to address questions on the webcast. Thank you, John. Our first question comes in. Congratulations on a solid set of results. What is the normal run rate in terms of top line and bottom line going forward, given that Q3 numbers were much higher than previous quarters? I think that, in general, every quarter we have a snapshot of certain projects that outperform and others do not. But in general, we will probably be looking at maybe $1.1 billion to $1.2 billion per quarter moving forward, annualized to be $4.8 billion to $5 billion, give or take. And obviously, we expect a better return on the EBITDA level, both on the MEA and the U.S. geographical region. Our next question, would you consider expanding your concession portfolio through venturing into owning and operating data centers? If so, can you give some color on investment size and location? Well, I have to say that data centers have no lack of developers and no lack of cash, particularly in the U.S. I would say never say never, but at the moment, I don't think that on the concession side, we are needed in a place like the U.S. because there are mega players, whether from the development side or from the hyperscalers. We're happy to create value by being a contractor. And obviously, if there is an opportunity that would create shareholders value and that would create reoccurring, decent returns, we will definitely not oppose to jumping on. Our next question, congratulations on an excellent set of numbers. Can you please talk through the revenue growth increase? Well, the revenue growth is simply reflecting the backlog that we currently have and the performance that we are seeing across all our regions. The power work in Saudi, the concession in the Emirates. Obviously, the data centers story in the U.S. is not only reflecting size, but also reflecting speed. The schedules that are mandated by our clients and developers on the data centers are quite challenging, and that generates a higher level of revenues on a quarterly basis. This is why I just said that we expect a run rate of $1.2 billion a quarter. But obviously, we are looking that as on an average. We will always be seeing months that are showing much higher results and months that are showing lower ones. Our next question, can you provide the project pipeline for 2026 and further periods? Will it be majorly from which geography? Obviously, I am not going to share the pipeline in public like that. But having said that, we are seeing a healthy pipeline on the data center space in the U.S. We are seeing infrastructure in the Middle East also as a potential pipeline. We are focusing on water and power in the Middle East region. Obviously, data centers will continue to be a bright spot, at least for the near future in the U.S. Our next question, what was the reason for the huge increase in other income? Basically, there are two main components to that. One of them is sale of scrap and old equipment, and the other one is a management fee on one of our projects. Our next question, congratulations on the strong results. Could you please share your outlook on expected award activity in Egypt for 2026 and beyond? The 900 megawatt wind project. Well, Egypt, we will be very selective, moving forward. As we have been, by the way, for the last 2 years. We have been focused on foreign-funded projects. We believe that our 900 MW is a potential opportunity where we will be not only the developer with our partners, but also the EPC contractor for the balance of plant. That is a target for us. We will be looking at selected projects, such as the developer from Abu Dhabi, Modon and Ras Al Khaimah, maybe some particular infrastructure projects that are foreign funded. But we believe that our activity in 2026 will be much more robust outside Egypt than inside Egypt. The next question, could you provide your view on your cash position, including the level of cash you expect to maintain going forward? Okay. First, it is a nice problem to have. Let us look at it this way. I would like to say maybe a few comments on that. Number one, generally, contractors would like to maintain a sizable cash because number one, they are operational cash. They support the operation, particularly that we are generating $1.2 billion of revenue on a quarterly basis. Number two, it gives us the capacity to sign large size contracts, because our clients see that we have the bandwidth or the financial depth, to be able to intervene if there are challenges on any project, particularly in the U.S. and the large size projects, such in the data centers space. Having said that, we believe that the level of free cash flow could be in the neighborhood of $150 million, give or take, plus or minus at this moment. Our next question is, do you have a plan for any sustainable dividend policy for future years? Are the EBITDA margins expected to remain in the same level in Q4 compared to Q3? Obviously, we expect to have a sustainable dividend policy, moving forward. Obviously, that policy will be kind of fine-tuned, when the combination takes place, with OCI. Because then it will not be OC alone at this stage. Having said that, we expect our EBITDA margin to be much higher than it was the years before. We are looking at 7.5%, give or take, for the MEA region and 3%, again, plus or minus for the U.S. We have a couple of questions regarding the same topic. Can you explain the rationale for the proposed merger with OCI, and any update on guidance on date for release of the terms of the proposed merger? The rationale basically is that we will be able to access a war chest that would allow us to write larger checks for our infrastructure investments moving forward. That would give us also the bandwidth to go beyond the MEA region and to go to robust markets such as the U.S. So this will give us that. Plus the fact that there is a fine group of colleagues that will be joining that will be a great enhancement to our ability to invest and look at expansion plans outside the construction scheme. As far as the timeline, we are currently expecting the due diligence reports, the fair value reports, and once this comes in, then a lot of things will be falling into place, discussions with OCI, looking at our board, our shareholders and stuff like that. But at this moment, we are on waiting mode, for our advisors to give us their reports. Along with timeline on announcing the terms, how long will it take to complete the merger once the terms are announced? We believe that it will not take that long. I think that, once both shareholders approve that, on both sides, we are talking maybe, 6 weeks, give or take, or more, but it is not like it is a 6-month period. But we still have to go through the drill of boards, shareholders, general assembly, regulators, and stuff like that. Our next question. Egypt recently announced plans to establish three data centers. Will Orascom be participating as a contractor for these data centers? Obviously, if it is a valid opportunity for our construction group, we will look at it very seriously. Not only that we are well positioned for that, but we have way advanced expertise compared to the rest of the market in that space. We have been working with the top-notch data centers developers in the U.S. We have the technical expertise, we have technical superiority, we have up-to-date technologies. I think that any developer of data centers would definitely should be talking to us, among others, obviously. So far, we have completed the question sheet by webcast. John, did you receive any by phone? At this time, we still have no questions on the phone lines. I will turn it over to management for closing remarks. Well, thank you very much. I hope we were able to respond not very vaguely to some of the questions here but we will keep you posted with our developments on the combination effort. We are looking forward to provide next year our 2025 results. We are quite bullish on our future and let's keep our fingers crossed. Thank you so much. Ladies and gentlemen, this concludes today's conference call. We would like to thank you for your participation. You may now disconnect your lines. Have a pleasant day.