Good morning, everyone, and welcome to the Soltec Power Holdings' nine-month 2021 results conference call. I'm Meritxell Perez, Head of Investor Relations, and I'm joined today by Soltec CFO, José Nuñez. He will guide you through the nine-month 2021 results, and afterwards, we will open the Q&A session. We're going to take questions both from the telephone and the platform. Thank you. Now let me hand over to José. Please, José, go ahead.
Thank you, Meritxell. Good morning, everyone. Let's start with the highlights of the period. I'm on page number five. Revenues reached EUR 186.9 million at the end of the first nine months of the year, while adjusted EBITDA was EUR -22.5 million and net profit totally EUR -20 million. If we focus on Q3 2021 figures, revenues stood at EUR 100 million, an 18% increase compared to Q3 2020, and a 15% increase versus the H1 2021 figure. As anticipated, revenues in this third quarter have increased compared to the previous quarters. In the same way, we expect the fourth quarter to be the strongest of the year and revenues to reach between EUR 395 million and EUR 440 million for the full year.
Our operational indicators keep showing record figures. This is a sign of the strength of our business and the strong demand we continue to see for our products. In Soltec Industrial, backlog grew to EUR 397 million, and pipeline reached EUR 3.1 billion at the end of the period. As for the project development division, Powertis, we have rotated 774 MW in Spain and Italy during the first nine months of the year, including 249 MW rotated in 2020, but booked in 2021. Pipeline continued to increase significantly, standing at 9.1 GW at the end of September 2021. We have entered two new regions in the quarter: Colombia and the U.S. Therefore, we're maintaining our guidance for the full year 2021.
In Soltec Industrial, we expect revenues to be between EUR 395 million and EUR 440 million, and EBITDA margins to be between -1% and +1%. We are confident that a strong Q4 will allow us to achieve this guidance. In addition, in Powertis, we are expecting a pipeline of 10 GW for the full year, and a rotation of assets, partial or total, ranging from 600 MW-1,000 MW. Let's have a look now at the operational indicators of Soltec Industrial and Powertis. As we can see on slide seven, Soltec Industrial has reached a track record of 10.2 GW, out of which 1.9 GW have been supplied in the first nine months of the year. We're the third global tracker supplier by accumulated GW. Regarding our diversification, LatAm accounts for 47% of our MW supplied, followed by North America, 24%, Europe, 19%, Middle East, 7%, and Asia and Pacific, 3%.
On page number eight, we can see how we continue to register all-time high figures in the backlog and pipeline of Soltec Industrial. At the end of September 2021, our backlog reached EUR 397 million, 3.1 GW, a 210% increase year-on-year. Despite the difficult market conditions, we are demonstrating strong contract closing capacity. Our pipeline also increased 20% year-on-year, reaching EUR 3.1 billion, 25 GW. Projects developed by Powertis account for EUR 84.9 million, 225 MW, of Soltec Industrial's backlog, and EUR 874 million, 1.9 GW, of Soltec Industrial's pipeline. Based on the strength of these operational indicators, we can expect the revenues for the fourth quarter of 2021 to clearly improve compared to previous quarters. On slide nine, you can see the breakdown by geography of Soltec Industrial's backlog and pipeline. Without further delay, let's move now to Powertis.
We are now on slide 10. Powertis made significant progress through the year to achieve its goals for 2021, namely achieving a 10 GW portfolio, being able to expand into new markets, and continuing its rotation strategy. Our pipeline for Powertis stands at 9.1 GW at the end of September, close to its full-year target. We have 722 MW in the backlog. These are projects fully de-risked that could start construction within the next six to twelve months. We have 1,369 MW in the planning stage, significant increase compared to the previous quarter. Most of these projects have already been partially rotated and have provided cash to the company during the year. We have 2,759 MW of projects in early stage, and 4,229 MW of identified opportunities, projects in early stage with an expected probability of completion under 30%.
On the next slide, slide 11, we can see the breakdown by geography of Powertis' backlog and pipeline. In a nutshell, before we conclude this section on Powertis' operational indicators, we're growing as projected in Brazil and Spain, and much faster than anticipated in Italy. Now, let's have a look at the financials for the first nine months of the year. On slide 13, we have the split per quarter for Soltec Power Holdings and our two businesses, 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. We saw a slight recovery in Q2 2021, and in Q3 2021, we have seen further progress. Q3 2021 revenues from July 1st- September 30th reached EUR 100 million, and revenues for the first nine months of the year stood at EUR 186.9 million.
As for the consolidated adjusted EBITDA, as you can see, our figures continue to be impacted by the global disruptions currently being seen in the market. EBITDA for the first nine months of the year stands at EUR -22.5 million, with EUR -19.9 million coming from Soltec Industrial and EUR -1.2 million coming from Powertis. Before we go any further, I believe it's also worthwhile to point out that consolidated adjusted EBITDA also includes the corporate expenses incurred by Soltec Power Holdings and the consolidation adjustments. Finally, as you can see, consolidated net profit for Soltec Power Holdings was EUR -20 million at the end of September. On slide 14, we can see the comparison between the first nine months of 2021 and 2020. On slide 15, we have additional details about the third quarter results.
As explained before, our consolidated revenues for the third quarter reached EUR 100 million, a EUR 50 million increase compared to Q3 2020. Consolidated adjusted EBITDA reached EUR -3.4 million, and net profit totaled EUR -0.1 million. If we look at the two businesses, Soltec Industrial sales went up to EUR 100.7 million. EBITDA was EUR -2 million, while net profit for Soltec Industrial reached a positive figure, EUR 3.8 million. Powertis, on the other side, registered an EBITDA of EUR -1.6 million and a net income of EUR -4.2 million. On slide 16, we can see that we are on track to achieve our full year guidance for Soltec Industrial. On the left side of the slide, you can see how revenues have been recovering quarter-over-quarter.
As we mentioned before, we expect a very strong fourth quarter driven by our solid backlog, and we're confident that we're going to reach our target range of EUR 395 million-EUR 440 million of revenues. In terms of profitability, the Soltec tracker business has been affected throughout the year by delays caused by the increase in the price of raw materials and other global disruptions linked to logistics and human resources. We believe we're going to have a profitable fourth quarter driven by our strong revenue base. Before we conclude the presentation, a few closing remarks. We are now on slide 18. First of all, please allow me to revisit our revised guidance for the year. For Soltec Industrial, we expect revenues to be between EUR 395 million and EUR 440 million, and EBITDA margins to be between -1% and +1%.
For Powertis, we expect to reach a pipeline of 10 GW and rotate assets partially or totally from 600 MW- 1,000 MW. Looking forward, we continue to see global disruptions affecting the sector, including changes in the terms and conditions regulating international logistics and a shortage of personal resources in some locations, challenging global business environment that is expected to continue throughout 2022. Please let me stress that our business prospects remain unchanged in the midterm. There is a strong growth potential for renewable energies, more specifically photovoltaic energy, and it is very clear that it is already a worldwide reality. Thank you, Merit.
Okay, great. Thank you very much, José. We can now move to the Q&A session. Please, operator, go ahead.
Thank you. The Q&A session is now open. If you wish to ask a question, please press star followed by one on your telephone keypads. You can also submit your questions through the website platform. Please remember to keep the phone line questions to one per person. We now have the first question on the line from Jorge Guimarães from JB Capital. Sir Jorge, please go ahead.
Hi, good morning, everyone. I have two questions, if I may. The first one is why is the cost of goods sold per going down over recent quarters, while the cost of raw materials is going up? So, if there was any change in accounting policy, this would be the first one. The second one is regarding the evolution of backlog in Soltec Industrial. The number of MW went down, but the value of the backlog went up. Doing some back-of-the-envelope calculations, the new entries seem to be priced in at EUR 300,000 per MW or something like that. If you can give us some extra color on the evolution of the prices going forward, it would be very helpful. Thank you very much.
Okay. Thanks, Jorge. Well, let me start with the last question. There are two reasons for that. I mean, average selling prices, as you mentioned, and you're right, went up in our backlog, as I said, because of two reasons. First one is that tracker prices have gone up. This is obviously linked to the fact that we're seeing a significant level of inflation in relation to commodities that we employ in order to manufacture trackers. In addition, there is also the fact that we basically have added in our backlog projects with additional services, which tend to have a higher average selling price.
The combination of these two elements is what basically driving the effect that you're currently seeing, the fact that MW went down in our backlog, but at the same time we have an increase in the value of our backlog in euros, expressed in euros. Okay? Now, concerning the first question.
Okay. Sorry, but the new entrants would be done at EUR 370,000 per MW, so it's nearly the full cost of a solar PV park. Sorry to ask again, but it's
No, but.
A very high number indeed.
No, no, don't worry, Jorge. No, but the current cost of a fully PC plant is much higher than that one, based on the inflation we're currently seeing in the market. It's based on, as I said, on two different reasons. On one side, we have the increase in the price of trackers, which as I mentioned before, have gone up, and at the same time, most of the contracts we are incorporating into the backlog we have right now, or we had at the end of September, include additional services, and the two effects combined basically drive the average selling price of our backlog up. Okay?
Now, concerning the first question, basically, the fact that the cost of goods sold may have been going down a little bit is because we are basically incorporating into our operations improvements concerning how we deal with basically increasing the price of raw materials. We mentioned in previous calls that we've been very concerned in the past about the price of steel, and it's something that we've been hedging against from the very beginning, but as we also explained in the previous call, we're also taking more or less the same kind of measure with all the other raw materials we employ when we manufacture our products, and therefore, that's basically helping us to contain a little bit the impact of this increase in raw materials. Okay?
If you would like to ask any further questions today, please press star followed by one on your telephone keypads now.
Okay, we have another question coming from Jan Richter from Berenberg. Could you share with us the underlying assumptions to hit the low end of Soltec Industrial's 2021 revenue and adjusted EBITDA targets? Same question with the high end of both ranges.
Okay. Thanks, Jan, for the question. Essentially, the difference between those two basically values, it's related to the fact that we're considering more or less progress on some of the contracts that we have in our backlog. We're not talking about removing some of the contracts or adding some new contracts. It's just a matter of considering more execution or less execution. That's basically the only difference between considering EUR 395 million or EUR 440 million.
Another question from Jan Richter from Berenberg. The contribution of Powertis within Soltec Industrial's backlog rose in Q3 2021. It is mostly for projects located in Brazil or Spain?
Well, it has a bit of both, but actually it's mostly related to projects located in Brazil, okay, to basically the projects we're currently developing there, Araxá and Pedranópolis .
Okay. Thank you, José. We've got another question coming from Virginia Sanz de Madrid from Banco Santander. How can you be so confident on a very strong Q4 when global disruptions remain unchanged, such as transport costs and very high steel prices? Do you believe you can deliver an EBITDA margin of 7%-8% in the fourth quarter in the current environment?
Okay. Actually, the fact that we consider that we're going to be able to achieve our targets for the year is mostly related to the fact that we believe we're going to be able to achieve the revenue figure we have in our revised guidance. This has two impacts on our income statement or our P&L. First one is that obviously we will be able to generate, as we execute more contracts, and we recognize more revenue, a higher EBITDA, but at the same time, we have operating leverage that we haven't seen at the beginning of the year. Remember we started very slow at the beginning of the year. Q1 was, and we've seen it before, a very low figure in terms of revenue recognition. Q2 was a little bit better. Q3 has been better. Therefore, in Q4 we have two different impacts, as I said.
On one side, we're going to have higher EBITDA margins coming from higher gross margins from the projects, but at the same time, those sales will contribute more to basically generating operating leverage for the company. Okay? In terms of achieving the volume that we're considering for the fourth quarter in terms of sales, it's basically what we're currently seeing. I mean, as we have explained, we still have a lot of uncertainty in the market. Logistics is still a concern. The price of steel is not that big a deal so far. We've been able to deal with that in the past and we continue hedging against a particular variation, but certainly logistics is still a challenge.
Based on what we're currently seeing, the visibility that we have in our backlog, we believe the targets that we have for the year are still achievable, and it's something that we'll be able to basically achieve it before we reach the end of the year. Okay?
Another question from Antonio Pedreño from CaixaBank BPI. Hi, good morning. You expect an EBITDA margin of 6%-12% in the Q4 2021, which compares with the average of 6.7%. Could you please elaborate a little bit on this? Which drivers are moving the EBITDA margin so high?
Okay. Thanks for the question. This is a question that I believe is quite similar to the one we've just answered. As I said before, two impacts. One of them is obviously the fact that we'll be able to generate additional EBITDA because the new contracts we're currently executing are, let's say, better prepared than the ones we were executing at the beginning of the year. We've been able to take some measures to minimize the impacts of the global disruptions we're currently seeing in the market. The second impact is coming from operating leverage. You know, structural costs, corporate expenses are basically linear throughout the year. Our revenue recognition is clearly not.
In fact, we have already mentioned that we started very slow, and we're basically achieving a higher pace as we get toward the end of the year. The level of sales we're going to have at the end of the year will generate EBITDA by itself, but at the same time will contribute to dilute the corporate expenses we've been incurring since the beginning of the year. The two effects combined, the two impacts combined, will at the end of the day provide that improvement that we're currently considering in our EBITDA margins at the end of the year.
Okay, we've got another question from Virginia Sanz de Madrid from Santander. What was your net debt at the end of September 2021? And how was the working capital evolution?
Our net debt at the end of September was EUR 13.1 million. As you may remember, we did have a net cash position at the end of H1 2021, at the end of June. Obviously, there's a significant difference between the two figures. We already explained we were investing in the development of the Araxá and Pedranópolis projects in Brazil, and that obviously our net financial debt figure was going to be impacted, as we got towards the end of the year because of this particular issue. Now, having said that, if we look at, just to provide a few more details about the net financial debt calculation. If we look at the gross financial debt at the end of September, it went down from EUR 109.9 million- EUR 102.1 million.
We basically reduced gross financial debt in the third quarter of the year. At the same time, the reduction in our cash has been higher. Okay? We went down from EUR 130 million, roughly, to EUR 89 million, and that basically explains the difference between the net cash position we had at the end of June and the net financial debt position that we have at the end of September.
Okay, another question coming from Edward Bottomley from Berenberg. What proportion of the revenues guided for the Q4 is made up of trackers which you have already shipped to customers? Is revenue recognized once these trackers arrive at the customer's plant?
Well, it actually depends on the Incoterm that has been agreed with our customers. We explained in the call that we had about a month ago when we presented the H1 2021 results that obviously we're trying hard to basically agree FOB terms with our customers in order to basically remove transportation risk from our scope. We've been somehow successful in some of the contracts that we have been able to close with some of our customers during 2021. For the customers that basically have not accepted these FOB terms, as we explained, we are basically undertaking different measures such as break-bulk transportation, manufacturing closer to the job site. Basically, choosing suppliers that are closer to the project. By basically implementing all these measures, we've been able to mitigate the impact of these disruptions on our P&L.
Okay, we have no more questions right now in the platform. Thank you so much. This concludes the presentation of the Q3 results. Thank you.