Good afternoon, everyone, and welcome to Soltec Power Holdings' first half 2021 results conference call. I am Meritxell Pérez de Castro-Acuña, Head of Investor Relations, and I'm joined today, as usual, by Soltec's CEO, Raúl Morales, Powertis' CEO, Pablo Otín, and Soltec CFO, José Núñez. They will guide you through the H1 and Q2 2021 results, and afterwards, there will be time for Q&A. From now, you can upload your questions to the platform. Thank you, and now let me hand over to Raúl. Please, Raúl, go ahead.
Thank you, Meritxell, and good afternoon, everyone. Let's start with the highlights of the period. I'm now on page number five. For the first half of the year, revenues reached EUR 87.1 million. Adjusted EBITDA for the first half was minus EUR 19.1 million, and net profit of minus EUR 19.9 million. Net profit pro forma came in at minus EUR 16.9 million. As José Núñez will explain, net profit pro forma does not include the temporary net impact of Brazilian reais, hedging derivatives closed at the beginning of June for several projects. If we focus on the second quarter, revenues stood at EUR 58.6 million, a 7% increase versus Q2 2020, and 106% increase versus the first quarter. We are highlighting the second quarter since Q1 revenues registered lower activity levels.
Revenues in the second quarter have increased versus the previous quarter, as anticipated, and the second half of the year will be better than the first one, targeting from EUR 395 million - EUR 440 million for the full year. José Núñez, our CFO, will go into more detail later on. Our operational indicators keep showing record figures. This is a sign of the strength of our business and the strong demand we continue to have for our products. In Soltec Industrial, backlog continued to grow to EUR 363 million, and pipeline reached EUR 2.9 billion in that period. As for the Project Development division's Powertis, we have rotated 679 MW in Spain and Italy during the first six months of the year, as Pablo will explain later. Pipeline continued to increase significantly, standing at 7,100 MW, and we have entered in a new region, Denmark.
Let me remind you, on September 8th, we released our guidance for the full year 2021. In Soltec Industrial, we expect revenues to be in the range of EUR 395 million-EUR 440 million. Regarding EBITDA margins, we expect them to be in the range of -1% to 1% for Soltec Industrial. The most relevant adjustment is produced in the margins of the Industrial division, mainly due to the current conditions in the sea freights market, the availability of human resources in the regions where we have operations, and the shortage of certain electronic components. It is not a problem of revenues. Our backlog has continued to grow at all-time highs. We are seeing a strong demand of our products during the third and fourth quarter of the year.
When it comes to Powertis, we are expecting a pipeline of 10 GW for the full year, in line with our expectations, and the assets rotated partially or totally from 600-1,000 MW. To the before-mentioned conditions, we have analyzed the cost of opportunity related or linked to the rotating assets in a very early stage and decided to postpone certain rotations to seek better margins. Turning to slide six, let me go through the global disruptions that we are currently seeing in the industry, how are they impacting our manufacturing process, and the actions we are implementing to mitigate them. Shortage of electronic components may potentially increase our supply chain pressure in the 2nd part of the year. The increase of the prices of raw materials, mainly steel. As we have explained on several occasions, we pass through the steel prices to our clients.
Additionally, we are demanding additional guarantees to ensure commitments are met. Regarding the delivery of our tracker, it is important to reinforce that it's being affected by the most significant disruption for us, which are the changing conditions of the international logistics. Finally, the installation. Here, what we are noticing is the lack of qualified personnel in certain countries. Additionally, mobility restriction in certain regions have contributed to promote this bottleneck. The two most significant disruption for us nowadays are logistics and lack of qualified personnel in certain countries. As we explained, we are working hard to mitigate these impacts. We are changing the delivery terms and conditions of our products to avoid the impact of prices changes in international logistics. This is free on board or different origins near destination to minimize the logistic impact. When possible, we use break bulk instead of containers.
We are also closing new agreements with suppliers to provide us with greater international flexibility, prioritizing those that are closer to the projects to decrease freight movements, as well to reduce their environmental impact. We are also taking additional measures to help us recover profitability. First, we are implementing changes in the international structure to face these new challenges, such as the separation between tracker supply and services to improve accountability. Second, we are also making changes in Powertis business model by temporarily reducing asset rotation to achieve higher value. This is based on the idea that in the current environment, we can be more efficient by attaining greater integration, covering the whole value chain. For instance, rotating at COD. Pablo will provide you more detail later on. I'm now on page number seven.
We are taking advantage of the before-mentioned disruptions to improve our value proposition and reinforce our organization to capture value. A very relevant strength of Soltec Power Holdings is our vertical integration and global diversification that allow us to capture value through all the value chain and avoid risks in certain countries. Global disruption are helping us to efficiently implement new measures to adapt the company to these new challenges and improve our processes. We are adapting the development strategy to improve profitability by delaying the rotation of certain assets. We remain at the forefront of the industry in innovation. During 2021, we have launched a new product, SFOne, a one-peak configuration tracker to be flexible and adapt to the needs and requirements of every market and every customer.
Last but not least, we have recently launched a new concept, the Ecovoltaic, to be able to develop sustainable solar plants with a positive impact in the environment, the economy, and the local communities in which they are located. As we can see on page nine, we have reached a track record of 9.3 GW, positioning Soltec Power Holdings as the third global tracker supplier by accumulated gigawatts. Regarding our diversification, Latin America accounts for 46% of our delivered gigawatts, followed by North America with 26%, Europe with 18%, Middle East 7%, and Asia Pacific 3%. Going into the business on page number 10, we continue to register all-time high figures in our backlog and pipeline. At the end of June 2021, our backlog reached EUR 363 million, a 91% increase year-on-year, which accounts for 3.7 GW.
Despite the difficult market conditions, we are demonstrating a strong contract closing capacity. A good example are the recently signed project with Moss & Associates, which strengthens our position in the U.S. market, a key market in the solar and tracker industry. Our pipeline also increased 35% year-on-year, reaching EUR 2.9 billion, which corresponds to over 25 GW. Powertis is contributing to Soltec's backlog with EUR 26.8 million or 225 MW, and with EUR 720 million or 1.6 GW to the pipeline. Based on the strength of these operational indicators, we can expect the revenues for the third and fourth quarter of 2021 to reflect a significant increase in the supply of solar trackers compared to the first half of the year. With this, I leave the floor to Pablo.
Thanks, Raúl. Good afternoon, everyone. Glad to be with you all today. Powertis made significant progress through the year towards our 2021 goals, namely achieving a 10 GW portfolio, doubling the number of markets in which we operate, and continuing with our asset rotation strategy. Our pipeline stand at 7.1 GW at the end of the first half. We have 722 MW in backlog. These are projects fully de-risked and that we could start construction within the next 6 - 2 months. 887 MW in advanced stage. Most of these projects have already been partially rotated and provide cash flow to the company. 2,048 MW of projects in early stage and 3,426 MW of identified opportunities. Projects in early stage of development and with a probability of completion under 30%. In summary, we are growing as predicted in Brazil and Spain, and much faster than anticipated in Italy.
On Italy in particular, we anticipate that the company will surpass the 2 GW goal in this 2021, positioning Powertis as one of the lead developers in the country. Powertis is currently present in six markets, Brazil, Spain, Italy, Colombia, Denmark, and the U.S. Our goals for the coming months are to increase our footprint in new markets, mainly Colombia and the U.S., and lay down the foundation for further expansions. This expansion strategy is key for the company's success in the long term, as these new markets will become the key contributors to Powertis' P&L from 2023 and beyond.
By becoming a global developer, we are reducing dependence to any specific market and potential regulatory changes, such as those we just encountered in Spain with the Royal Decree 17-2021 of September 14, but which it got regulated the clearing prices of the energy sold to the spot market by certain technologies and projects. The Royal Decree was clarified a few days after its publications, and these amendments appear to have reduced the final impact to the solar industry. I would like to note that at this point in time, no Powertis project is affected by the Royal Decree 17-2021. On megawatts rotated, as of June 30th, Powertis has sold 679 MW, mainly in Spain and Italy. This figure includes 249 MW that we transferred in December 2020, but booked in Q1 2021.
The bulk of the megawatts transacted in this 2021 are coming from Italy, and we will continue with that trend for the remainder of the year. Our Italian portfolio is very strong, and we have made additional closings through Q3 2021. If we look now at Brazil, current market conditions are challenging for asset rotation at early stage. Thus, we recognize that it's best for the company to hold on to the projects and to rotate them at later stage. In Brazil, Powertis is building two projects that totals 225 MW. In Spain, beyond the projects in partnership with TotalEnergies, we have managed to build a very attractive and valuable portfolio. There are fewer and fewer new build projects in the country, and we are very proud of our achievements in 2021. As I noted before, we are not affected by the Royal Decree-Law 17-2021.
Regarding new markets, we are still in early stage, and we will start seeing contributions in the coming months. Now, let me hand over to José Núñez to explain the key financial metrics for the period.
Thank you, Pablo. Good afternoon, everyone. Let's have a look now at our first half and Q2 2021 financials. Let's start with a quick review of our key metrics for the quarter. On slide 16, we can see that our revenues for the second quarter of 2021 increased 7% to EUR 58.6 million compared to Q2 2020. However, adjusted EBITDA decreased EUR 3.9 million to negative EUR 12 million. At the end of June, the backlog registered by Soltec Industrial reached a new record of EUR 363 million, as it has been already explained before. On slide 17, we have the split by quarter for Soltec Power Holdings and our two divisions, Soltec Industrial and Powertis. Consolidated revenues in the first quarter were affected by delays caused by the increase in the price of raw materials and solar PV equipment, but we have seen a slight recovery in Q2 2021.
As for our consolidated EBITDA and net profit, they have been impacted by the disruptions already explained by Raúl Morales. Consolidated adjusted EBITDA reached negative EUR 19.1 million in H1 2021, with negative EUR 17.9 million coming from Soltec Industrial and EUR 0.4 million positive coming from Powertis. I believe it is worthwhile to point out that the consolidated adjusted EBITDA also includes the corporate expenses incurred by Soltec Power Holdings and the consolidation adjustments. Net profit for H1 2021 was negative EUR 19.9 million, while pro forma net profit totaled negative EUR 16.9. This pro forma net profit excludes the temporary net impact of Brazilian reais hedging derivatives closed at the beginning of June for several projects, Casablanca, Futura, Araxá, and Pernambucas.
Since at the end of June, we did not have the impact of the underlying liabilities that were designed to hedge against, and the mark-to-market valuation of these instruments generated a short-term negative result that is no longer applicable. Let me provide additional details about the second quarter results on slide 18. As explained before, our consolidated revenues for the second quarter reached EUR 58.6 million, EUR 3.7 million increase compared to Q2 2020. Consolidated adjusted EBITDA reached negative EUR 12 million, a decrease of EUR 3.9 million compared to the Q2 2020 figure. Net profit total negative EUR 15.3 million at the end of Q2 2021, compared to negative EUR 9 million at the end of the same period of 2020, while pro forma net profit was negative EUR 12.3 million for the quarter.
Soltec Industrial sales went up to EUR 59.6 million. EBITDA was negative EUR 9.3 million, while net profit and pro forma net profit were negative EUR 13.9 million, negative EUR 10.9 million respectively. Powertis, on the other side, booked an EBITDA of negative EUR 1.7 million and a net profit of negative EUR 0.5 million due to the lower rotation of assets in the quarter. On slide 19, we can have a look at our cash generation during H1 2021. We started the year with EUR 125.7 million of cash. We had cash inflows from operating activities of EUR 17.5 million. Investment activities added also EUR 0.3 million, while financing activities consumed EUR 13.6 million, resulting in a cash position as of June 30th, after considering also the effect of exchange rate variations, of EUR 130.2 million.
On the next slide 20, we can see that we reached a net cash position at the end of June 2021 of EUR 20.4 million, resulting from EUR 109.9 million of gross debt, mainly debt with credit institutions, and a cash position of EUR 130.2 million. As we explained in the call we had at the beginning of September, since we do not expect to rotate the two assets we are currently developing in Brazil, Araxá and Pernambucas, until construction is completed, our net financial debt at the end of the year will be impacted accordingly, resulting in an estimated increase of EUR 120 million-EUR 130 million. Without further delay, I leave the floor now again to Raúl to present the closing remarks. Raúl?
Thank you, José. As a key takeaway for the presentation, revenues visibility for 2021 remains strong, driven by the record figures of our backlog. We continue to have global disruption affecting the sector, and we have to highlight the changes in the conditions of international logistics and the shortage of personnel resources.
We recently released our guidance for the year. It is the visibility we have for the year, taking into account the global disruption I have been mentioning. But let me insist, business prospects remain unchanged in the midterm, despite current disruption. There is a strong growth potential for renewable energies, more specifically for solar energy. It is a worldwide reality. Soltec is fully committed to ESG. We have recently launched the concept of Ecovoltaic to refer to our projects that are fully aligned with the environment and communities where they are located. We are a sustainable business, and our commitment remains as strong as ever. Thank you.
Okay, great. Thank you, Raúl. I think we can move now to the Q&A session, starting from the questions we collected until now. Let's kick off with the first question coming from Jorge Guimarães from JB Capital. Please, José, go ahead.
Okay. Good afternoon. Jorge, we have several questions. I'll take the first two, and then Pablo and Raúl will answer the other ones. The first one is, will the cash flow generation in the second quarter seems to have come from working capital, namely client advances. How sustainable is that? Actually, that's not entirely true. In fact, if you look at our financials, there is a significant portion also of advances to suppliers. We have advances from customers and also advances to suppliers. In fact, advances to suppliers are basically about EUR 17 million. In essence, what we've been able to do, regardless of the results of the first half of the year, is to improve the way we've been managing the collections and the payments of the company, the cash flow at the end of the day of the customer.
We expect this trend to continue, more or less, in the same way in the coming months. The second question is, what is the full year 2021 tracker volume implied in the revenue guidance for Soltec Industrial? It's basically, as we explained in our last call, around 4 GW. Okay. A little bit less than 4 GW. Now I'll leave the floor to Raul.
Okay. The third question is, what is your current volume expectation for Soltec Industrial in 2022, 4 GW? Well, obviously, as 4 GW is going to be our expectation for this year, next year will be higher than that. We have to evaluate our prospects, but will be slightly more than 4 GW, for sure.
Four questions. Good afternoon, Jorge. What is your expectation about the average selling price per megawatt in Powertis going forward? We maintain the same guidance that we provided in the previous call, in which we reduce the expectation for Brazil from 4x - 6x to 2x - 3 x. We maintain the guidance for Spain and Italy as moving forward. Question number five. On a recurring basis, what precentage of projects you expect to sell at RTB/COD per year? We only have changed our view for Brazil at the moment as we speak. More specifically, we have changed our view for Araxá and Pirapora, two projects that we anticipate to rotate at RTB and now we're moving to COD. For the rest of the markets, no changes there.
Okay. Next question is from Virginia Santamaria. Number one is, do you see it is feasible to install 3 GW of trackers in second half of 2021? Well, it's not to install, so we are talking about supply. Obviously, to get the expected volume of 4 GW, saying first half of the year, we deliver about one. Yes, we are going to deliver 3 GW for the second half of the year. Yeah.
I'll take the second one. It says, in Powertis, how much is the CapEx to be spent in getting the assets you're not rotating from RTB to COD? Essentially, as I explained during the presentation, we're talking about EUR 120 million-EUR 130 million. That's the impact that we are estimating for our net financial debt, and that's the full amount of the CapEx of the projects. The next question is number three. It says, your net debt will go up. Do you see a risk of not being able to provide warranties for new orders? If you remember, we do have a bank warranties line for a total amount of EUR 110 million. That amount is there for us to use, obviously, and it does not vary based on the net financial debt we may have at any point in time.
Obviously, if we need additional warranties because the activity is able to peak even higher than what we are currently expecting, we would have to go to market to try to get some more. For now, based on our estimates, the amount that we currently have, EUR 120 million, should be enough to be able to cope with the volume we may need in the future.
The fourth question is, do you see average selling price for trackers moving up on higher cost inputs? ASPs are increasing, yeah, we are passing through all the new costs of transportation and steel. They are increasing price, yes.
Okay, next question coming from Jorge Guimarães from JB Capital. This one's for Raul.
Number three. What is the current logistics situation implying in terms of cost per MW sold? Well, it depends on the Incoterm, because as we said before, now we are moving our strategy to either FOB or delivered at place, but manufacture closer to the projects. Let's say this is not easy to give a certain number, but in some cases, when the Incoterm is delivered at place, we have seen up to $0.05 or $0.05 a watt, so as high as that. Obviously if we supply in an FOB basis, the transportation cost is very low.
Okay. Next question from Virginia Santamaria from Santander. The first one is for Raúl.
The question is, "Do you see Iberdrola's announcement today to halt its renewables investment in Spain given government's announcement? Does this affect you?" In our particular case, it's not the question because usually all these decisions are taken with a lot of months in advance, and we didn't have any project with them in Spain, so it will not affect us. The second part of the question, "Do you expect others to follow?" Obviously, it's impossible to know what others are going to do. We believe this is a temporary situation that has to be clarified in the next few months, and we are positive about this.
Question number two, do you still need to book in second semester 2021 for already rotated assets in Powertis, or has all been recognized already? We do not have any pending recognitions for assets sold in the first semester. We do have, though, additional rotations due in the third and fourth quarter of this year. There is another question. Powertis, you speak about Colombia, but it is not shown in the slides. We, in Colombia, we entered the market through the first semester, so we would start showing growth in the market in the third and the fourth quarter results of this 2021.
Okay. Next question from Miguel Medina from [Armanex]. This one is for José.
Good afternoon, Miguel. It says, "Will you continue to hedge Brazilian reais in the future development activity in Brazil? It seems that hedging Brazilian reais against the U.S. dollar is now cheap. Does it have an impact on the IRR of the project?" Let me just provide a quick summary of what we're doing in terms of hedging against foreign exchange fluctuations. Basically, our policy is to hedge any potential open position we may have, both on the development activity and also on the industrial activity. The comment that we made during the presentation regarding the pro forma net profit calculation, it's basically related to the industrial activity, not to the development activity, just to be clear on that particular side, okay? Our policy, as I said, is basically to hedge against those variations.
We're doing it on every single occasion, as soon as we can. Okay.
Okay. Next question from Jan Richter from Berenberg. This one is for Pablo.
Why is it more challenging to sell early-stage assets in Brazil? Unfortunately, there's not just one simple answer to that, and it could take us hours to discuss about it. The reality is that we just face a very volatile period in a time that we need to enter into the construction of the assets, and that basically forces us to reconsider the strategy and take the projects to COD. I say there's just not one single element. There is a combination of multiple elements that affect us at the time in which we need to take action on specific projects.
Next question coming from Adoc Belluca from Bank of America Securities. This one is for Raúl Morales.
The question is about your implied ASPs for H1 2021 versus H1 2020 reflect the same trend seen in the steel prices, which have increased higher. Could you help us understand this? Well, obviously, this is not linear. A tracker price is not just the steel prices. There are some components that they are not related to the steel price. Another thing is that, not in all situation we are delivering the same kind of trackers, and they don't use the same amount of steel, because it depends on the wind standard or the wind speed in the given project. It's difficult to compare with ASPs. It depends, especially if we have a big project that is impacted by, let's say, a higher amount of steel. It's not linear.
Next question coming from Kevin Dunn from [Numis]. This one's for Raul as well.
Given the significant cost inflation in the industry, do you see any risk of projects getting pushed from next year into 2023 as developers wait for prices to normalize? Can developers make the returns work to want to develop brand-new projects given the current price situation of trackers, modules, freight? This is something that obviously we cannot advance, as no one know what's going to happen in 2023. We have seen that in the past, and we believe that most of the projects, they don't have more chances to delay the projects. It could be a risk, but I believe it is limited, that impact. What we could see is that some developers renegotiating some PPAs, that makes more sense than to start brand-new projects from scratch.
Okay, great. Thank you, Raúl. We have no more questions right now on the platform. For any further question, you can always contact Investor Relations department anytime. Thank you all for your interest in Soltec Power Holdings, and have a very nice day.