Good morning, everyone, and welcome to the Soltec Power Holdings Full Year 2021 Results Conference Call. I am Meritxell Pérez, Head of Investor Relations, and I'm joined today by our CEO, Raúl Morales, our CFO, José Núñez, and the CEO of the Project Development Division, Pablo Otín. The purpose of this call is to review the full year 2021 results and to make a follow-up on the current environment when providing you with an outlook for the full year 2022. After the presentation, we will open the Q&A session. Please, Raúl, go ahead.
Good morning, and thank you for being here today. Let's go into the highlights for 2021 on page six. 2021 has shown an excellent execution in terms of tracker supply and project development. We ended the year with consolidated revenues of EUR 346.5 million. It is an important year-on-year revenue growth despite the increasing supply chain challenges. Our EBITDA margin for the group reached -2%, affected by supply chain disruptions, and our net income reached -EUR 1.2 million at the end of the period. Let me review the performance of our divisions. It has been a record year in terms of revenues for our Industrial division. We have been able to supply EUR 412 million, 3.4 GW in a very difficult environment.
The year began very slow, and as we anticipated during the fourth quarter, we were able to supply more than EUR 223 million, reaching the guidance we provided to the market. EBITDA margin for the full year was -3%, although we have been able to improve profitability every quarter, and EBITDA margin in the fourth quarter reached a + 3%. During the last 12 months, we have seen strong disruptions in the global industry that had a clear impact on margins. In terms of EBITDA margins, record volume of gigawatts supply has not been able to compensate the supply chain disruption and the scarcity of qualified labor in certain regions. It is also important to point out our strong operational indicators. The backlog reached EUR 215 million, with an increasing tracker ASP and other construction services.
Our pipeline stands at more than EUR 3 billion. In our Project Development division, the pipeline registered a robust growth, up to 10,300 MW above the guidance provided. The division has been able to demonstrate an excellent execution during the year with unparalleled capacity to identify opportunities and generate new projects. It has entered an important market in terms of PV energy with significant potential. The most important thing, it has started to demonstrate the benefits of synergies between the both business lines. We are very optimistic with our current pipeline of projects under development. Our Project Development division plays an important role helping the company to work towards further integration and generate further value to, for our shareholders. We have rotated 1.3 kW during the year, beating the 2021 guidance.
When we look at the global environment, as you all know, 2021 has been a challenging year, but long-term market outlook remains very strong, stronger than ever, despite the short-term volatility. The value proposition of solar tracker versus fixed-tilt installations remains very solid, and our positioning and offering is unique to capture value due to our business model, as we will review later. We forecast the year 2022 to be a transition year in the whole industry. The disruption we saw in 2021 partially remain in the industry. It is a situation that will still impact timelines and cost of the projects. In our view, we won't see a normalized situation before 2023. On the other hand, we see a very strong demand in our markets for our products and services.
As we have been anticipating in recent quarters, the most relevant disruption for our business is logistics. Logistics are impacting us, not just due to the increasing cost, but also due to the changing market dynamics. Additionally, mobility has been constrained for our construction workers in certain regions. However, we expect this situation to improve as COVID-19 eases. We began implementing action to mitigate the effect of the disruption in the year 2021, and I would like to thank all the team for their effort. We made important changes through the year, and we have been able to improve margins significantly. When we look at the highlights, we have an AA score by MSCI and a Low Risk ratio according to Sustainalytics. To improve the commitment of the solar plants, we have launched the Ecovoltaica concept.
Through this concept, we aim to develop highly sustainable solar plants with a positive impact in the environment, economy, and local communities. We are working towards a full ESG integration in our solar plants. During 2021, we also introduced a new tracker with a configuration one in portrait, completing our commercial proposition. In the field of open innovation, we've launched Aurora, a project accelerator seeking to promote innovative ideas to fight climate change through renewable energies. It is important to understand that we are a company based on three pillars. Sustainability, as we were born sustainable, innovation in the energy transition, and vertical integration to capture value. As further on integration, please, Pablo go ahead.
Thanks Raúl, and good morning all. Powertis had an extraordinary performance in 2021. We executed the strategy laid down at the beginning of the year and delivered on both growth and execution. On the development side, the key highlights by market are as follows. In Italy, we have become a main developer and grown in every metric. Our pipeline increased by over 1 GW through the year, standing now at 2.8 GW. More importantly, our team in Italy managed to advance the projects through the development process, and the company has 2+ GW under advanced stage. Most of these advanced projects are under co-development agreement with Aquila and have gone through thorough third-party due diligence process. These projects provide a good mid-term visibility in Italy for both Powertis and Soltec Industrial. In Spain, we succeed under a complicated environment.
Pending regulation at the beginning of the year delayed our growth plans and administrative bottlenecks slowed down the permitting of the existing projects. Despite all of that, our Spanish team completed the first project in Murcia, built by Soltec Industrial, and secure new interconnection rights for 200+ MW through the year. Our teams has demonstrated an incredible ability to perform under very complicated conditions, and we are well prepared for the upcoming grid auction process. Brazil, the company's largest Latin American market, proved to be quite challenging through the year. Market conditions led us to take on the construction of Araxá and Pedranópolis project, and the group has done an excellent job tackling the situation. Regarding new markets, during 2021, we entered in U.S., Colombia, and Denmark.
Colombia and Denmark contributed roughly equal, 300+ MW each, and we're not yet reporting projects in U.S.A. Looking forward, we anticipate things shaping differently by year-end 2022. Growth in Denmark will be gradual. We will continue with site sourcing and with introduction of the eco-voltaic concept to local communities. This approach has differentiated Powertis from the pack and is very well-received by most of the stakeholders. Colombia, w e have a great start in 2021, securing our first project and first PPA. The Colombian market might become a great growth contributor in this 2022, as the country is starting the new interconnection process, equalizing old and new developers. We're really well prepared for that. U.S.A., w e have spent most of 2021 preparing our disembark. Mistake could be very costly, and we have now laid out the strategy for 2022 and beyond.
U.S.A. will start contributing projects shortly. All these efforts in 2021 are reflected in the numbers shown in this slide. In short, by the end of 2021, we have constructed 5 MW. We have 225 MW in construction, 500+ MW ready to build, and 3+ GW in advanced stage. The rest of the pipeline, 3.7 GW, is in early stage. Regarding the split, 57% of the megawatts are in Europe and 43% in Latin America. With that, over to you, José.
Thank you Pablo. Good morning, everyone. Let's have a look now at the operational indicators of Soltec Industrial on slide 13. We continue to register strong figures in our backlog and pipeline. As you know, in our industrial business, we define backlog as projects signed, not yet fully executed, projects in which we still have some revenue recognition pending. Pipeline, potential future contracts, which we do believe we have a certain chance of success. Based on these two definitions, our backlog at the end of December reached EUR 250 million, coming from EUR 190 million at the end of last year, which represents a 32% increase. Our pipeline increased to almost EUR 3.1 billion compared to roughly EUR 2.7 billion at the end of 2020. 15% increase year-over-year.
The projects developed by Powertis accounted for EUR 21 million out of the total backlog of Soltec Industrial, 8.5% of the total, while they're also contributing EUR 874 million to the pipeline, EUR 28.5 million of the total. As you can see, Powertis is already an important customer for Soltec Industrial, and its relevance is expected to grow in the future. If we look now at the breakdown by probability of our pipeline, almost EUR 1.7 billion had a probability equal or higher than 50%, which is a clear confirmation that the company has a solid and visible future. On the next slide 14, you can find additional details about the geographical breakdown of our backlog and pipeline.
Regarding our backlog, Latin America and North America were our largest market at the end of 2021, representing 63% and 30% of the total, respectively. The latter clearly shows how we've been able to successfully increase our presence in the United States throughout the year, one of our goals for 2021. If we look at our pipeline, it is more diversified geographically than our backlog. Europe accounts for 33% of the total, while Latin represents 31%. North America, basically the U.S. market, represents 19%. Let's move now to the next section of the presentation, the 2021 financial results. On slide 16, we have a quick summary of the 2021 financial results for Soltec Power Holdings, both on a per year and on a per quarter basis. We have focused on three key metrics: revenues, adjusted EBITDA, and net profit.
As Raúl has explained earlier, consolidated revenues reached EUR 347 million, 47% increase versus full year 2020, driven by the increase experienced by our activity levels during the second half of the year. Consolidated revenues per quarter have been improving throughout the year, totaling EUR 160 million during Q4, a 355% increase year-on-year compared to the Q4 2020 figure. EBITDA margins have been improving throughout the year, helped by the measures taken to mitigate global disruptions on our solid revenue base. As we have explained, they have not been able to fully offset the impacts we have experienced in relation with international logistics and human resources scarcity.
Before we go any further, let me remind you that the consolidated adjusted EBITDA does not only include the EBITDA generated by the two businesses, but also the corporate expenses incurred by Soltec Power Holdings and the consolidation adjustments. EBITDA at the end of 2021 was - EUR 6.9 million compared to - EUR 9.4 million at the end of 2020. While the Q4 figure reached EUR 60 million, almost EUR 24 million more than the Q4 2020 figure. Finally, consolidated net profit was - EUR 1.2 million compared to - EUR 4.9 million at the end of last year. While the quarterly figure was EUR 18.8 million compared to the - EUR 11.6 million achieved in Q4 2020.
On slide 17, we can see how in our Industrial division, revenues reach EUR 411.8 million, which represents the largest sales figure in the history of our Industrial business, due to a very strong Q4, during which we were able to generate more than EUR 223 million. Even though profitability has been a concern all year long, and it still is, our revenue base, together with the measures taken to mitigate the impacts of global disruptions, have improved our EBITDA margins in the fourth quarter to a + 3% figure. On the next slide 18, we have the evolution of our sales and EBITDA margins by quarter for the last four years.
If you look at the EBITDA margins, our Industrial business has been able to improve from a - 30% margin at the beginning of the year to a +3% in Q4. It is clearly not yet the margin Soltec Industrial should have on a normalized environment, but our margins are improving as a result of the measures taken by the company, and we expect this trend to continue during 2022. Our priority at this point, once activity levels have come back to normal, is clearly the recovery of the margins in our Industrial division. In order to do that, we continue the implementation of measures throughout our whole value chain to be better prepared to face the disruptions we're still seeing in the market.
On slide 19, we can see that as we already mentioned, the most relevant impacts in our profitability are coming from logistics and labor costs, both external and internal. On this slide, we're comparing the last year we had without COVID-19, 2019, against 2021. As you can see, logistics as a percentage of total sales have gone up significantly from 6% to 14%, while personnel costs have also increased compared to a normalized scenario. If we move to the next slide 20, we have a look at the breakdown of our sales at the end of 2021. On the left side of the slide, you can find the distribution by activity, and on the right side, we have the distribution by geography.
As you can see, supply represented 87% of our sales at the end of 2021, while other construction services grew up to 13%. By geography, LATAM leads the way in 2021 with 48% of our sales, 24% coming from Brazil and another 24% coming from the rest of South America. Followed by Spain with 28% of our sales. North America, in this particular case, represented only by the U.S. market, went up to 21% at the end of the year. On slide 21, we have a quick summary of the key financial metrics of our project development business, Powertis, which had, as explained already, a very strong contribution during 2021, driven by the rotation of assets in Spain and Italy.
On the next slide 22, we can see the impact of the different transactions that were booked in 2021 by Powertis. In Spain, we rotated 95 MW that generated an impact of EUR 1.9 million in EBITDA and EUR 1 million in financial revenues in relation to the revaluation of the 35% ownership we keep on the asset. Achieving a total contribution to our P&L of EUR 2.9 million in Q1 2021. In Italy, due to the agreement we signed with Aquila in December 2020, we rotated 51% of 772 MW during 2021. The impact of this rotation is EUR 5.1 million at EBITDA level and EUR 4.9 million in financial revenues due to the revaluation of the 49% ownership we keep on those assets.
These transactions had a total impact of EUR 10 million in our P&L in 2021, but they will still provide more value to us as the projects get closer to ready-to-build status based on their milestone structure. Additionally, in December 2021, we signed another agreement to rotate 51% of 421 MW in Italy with Aquila, leading to another positive impact of EUR 9.6 million in our EBITDA and EUR 9.2 million in financial revenues. On slide 23, we have a summary of our 2021 cash flow statement. We started the year with almost EUR 126 million. Operating activities generated EUR 17.1 million.
Investment activities consumed EUR 101.2 million, mostly related to the investment in the Araxá and Pedranópolis projects. Financial activities consume another EUR 5.9 million. There was also a small variation of EUR 400,000 related to exchange rates. As a result, our cash at the end of 2021 totaled EUR 36.2 million. On the next slide 24, we have calculated net financial debt as of December 31st, 2021. Gross financial debt was EUR 114.4 million compared to EUR 116.4 million at the end of 2020. Cash and other financial assets total EUR 42.5 million, compared to EUR 127.9 million at the end of last year.
As a result, net financial debt was EUR 71.9 million at the end of 2021, compared to a net cash position of EUR 11.5 million at the end of December 2020. Let's move now to slide 26 to quickly review the 2022 outlook of the company. This outlook is based on the demand we foresee for our products, the supply chain disruptions and challenges we're still seeing worldwide, and the asset rotation we expect to have in our Project Development d ivision. We expect revenues for Soltec Industrial to be between EUR 450 million and EUR 550 million, while EBITDA will recover gradually and will be between 2% and 3% for the full year.
As it has already been mentioned, our long-term vision remains the same, and margins for the Industrial division should stand between 6%-7% in a normalized scenario. In order to be able to achieve this, we would like to stress that we'll continue implementing measures to mitigate the disruptions we're currently facing in the market. Regarding our Project Development division, Powertis, we expect EBITDA to be between EUR 7 million and EUR 11 million. Finally, for Soltec Power Holdings, we expect consolidated EBITDA to be between EUR 15 million and EUR 20 million at the end of 2022. Now I hand over again to Raúl for the closing remarks.
Thank you José. As a part of this presentation, we have also included a short review on our strategy that will be fully released on the 23rd of March in our Capital Markets Day, together with our strategic plan 2020 to 2024. If we look at Soltec and our journey since our foundation, the key has always been the integration. Integration has been key for our differentiation, key to avoid risks, key to capture value, key to keep growing, and key to balance our results, and this integration is now more important than ever. We believe this business can grow significantly and achieve higher and more balanced margins with a greater level of integration. In the year 2018, we created two business units, Industrial and Project Development. As we have all seen during the year 2021, our Project Development division has grown significantly.
Now, we believe that the best way to generate the value to our shareholders is taking another step in our integration to provide greater stability to our P&L account. This is a journey in which we can accelerate the transition towards renewable energy solutions. Our corporate purpose is to generate the most sustainable energy possible. The rationale to reach further integration levels is immediate access to relevant growth opportunities, retaining certain select assets. A more vertically integrated business model will allow Soltec to increase its flexibility to achieve the best timing for asset rotation when required. The rotation of PV assets at a later stage of development should also enhance returns when required.
Additional synergies with the Industrial business. Expanding the business down the value chain offers considerable advantages, a larger customer base, reduced exposure to market volatility, and access to a more stable EBITDA. This journey needs to find the right balance between the capital required to develop further projects, rotation of assets, and power generation. In a growing market, it is our responsibility to generate further value to our stakeholders, and we believe we can do it through a greater integration. On the 23rd of March, we will release our strategic plan 2022-2024. Thank you very much for your attention.
Okay. Great. Thank you very much Raúl. We can now move to the Q&A session. We've got the first set of questions from Jan Richard from Berenberg. Raúl, please go ahead.
Thank you Meritxell. The first question from Berenberg is, "Can you share your view about your anticipated timing of a normalization in main input costs like personnel expenses, international shipping, and raw materials?" Well, 2022 will be a transition year, so it's difficult to define what is a normalization. What we see, stabilization in most of the costs. Staff cost or labor cost will depend on COVID-19 restrictions. We expect they will ease this year. About international shipping, raw materials, it's difficult to say, but we already transferred the pass-through of costs to the new contract. It will be, as I said before, a transition year.
Next question is for Jan. Good morning Jan. "Can you comment on how advanced is construction of the Brazilian solar PV projects?" The projects are over 50% completed, and more importantly, the electrical infrastructure, the interconnection infrastructure is well in place. We anticipate having both projects finalized and up and running by the end of the second quarter, early third quarter.
Next question is, when will Spanish and Italian power purchase projects start to contribute to Soltec Industrial's revenue? I mean, we're glad to report that the Spanish projects already start to contribute to Soltec Industrial revenues with the completion of the first assets. The Spanish projects will continue to contribute through the year, and we anticipate the first Italian power purchase project to start contributing to Soltec Industrial towards the end of the year, either in Q4 or early Q1 next. More in Spain and start either by the end of this year or early next. Next question is, to what extent could potentially short duration PPAs affect your availability to help in securing financing, shorter durations or volatility in wholesale power prices? Right now, we don't see a significant effect.
There's still quite a lot of liquidity, either for short and long-term financing, either from merchant PPAs or long-term PPAs. We don't foresee any issue right now in financing our assets, based on the strategy that we might take either on long or short PPAs. José?
Okay. I'll take the last three questions from Jan. Good morning Jan . What are the key assumptions behind your full year 2022 revenue and profitability targets for Soltec Industrial? Well, first let me say that as we have explained during the presentation, the outlook that we have for 2022 is based on the demand that we foresee for our products, the supply chain disruptions and challenges we're seeing in the market, and the asset rotation we expect to have from our project development division. Having said that, obviously, we've been taking a conservative approach to this guidance, to this outlook. We've been very clear since the very beginning explaining that, for instance, in Industrial business, we believe margins on a normalized scenario should be around 6%-7%.
In this particular case, what we're assuming is that for the full year, we will be achieving margins in the range of 2%-3%. That implies obviously some sort of improvement throughout the year of, or for EBITDA margins, starting perhaps slow at the beginning of the year, but then improving slowly but steadily throughout the whole year. Okay. Let's talk about the next two questions regarding working capital. Could you shed more light on working capital movements in 2022 at group level? Should we anticipate a meaningful cash outflow from working capital? I would say that we still need to invest more on the Araxá and Pedranópolis projects, as Pablo has commented before. We would see in the coming months an increase in our net financial debt, but things will get better towards the end of the year, okay, once the project gets completed.
Okay, we've got another set of questions from Jorge Guimarães from JB Capital.
First question, is it possible to clarify the reference to asset ownership? Does this mean Soltec plans to follow an IPP strategy? Well, the question is partially. I mean, we plan to retain certain selected assets. Obviously, they will not be relevant. I mean, that power generation will not be relevant by this year. We will give. I mean, this will be a gradual transition, and we'll give more details on our Capital Markets Day on the 23rd of March.
Okay, I'll take the next question from Jorge. Good morning Jorge. What is the estimate in terms of megawatts sold in Soltec Industrial and Powertis for the guidance in 2022? Well, in Soltec Industrial, essentially, we are thinking about more or less keeping the same level of megawatts that we have achieved at the end of 2021, okay, in terms of tracker supply. We expect a higher contribution from other activities, from other services, okay?
If we talk about Powertis , for Powertis , the answer probably is pretty similar. I mean, the expectation for 2022 in our guidance is similar to the assets that we have been rotating during 2021 total operation. More or less the same volume for Soltec Industrial, if we talk about tracker supply, with a higher contribution from other activities. For Powertis , we expect more or less the same level of recognition that we have experienced in 2021.
Next question is from Jorge. When do you expect to sell the Brazilian solar PV plant that you have to maintain on the balance sheet? Right now, we are focusing on the execution side. Once the projects are completed, we would decide whether these are some of the selected assets or not, as Raúl mentioned, and we'll provide more details in the Capital Markets Day in the coming weeks.
Okay. Next question from Bestinver. José?
Okay, the question comes from Gabriel Mejías. Good morning Gabriel. Do you think you're fully funded for the development of your business plan? The quick answer to this particular question is yes. I mean, if we're talking about our current business plan, yes, we're fully funded. If we're talking about our future business plan, we will provide more details in the Capital Markets Day that we will have at the end of March.
Another set of questions from Virginia Santamaría, Santander. Raúl, you can take the first one.
What has been the evolution you have seen in ASP in new orders? I mean, we see the average selling prices in, especially in the supply solar tracker business is obviously they've been increasing the last, let's say, a year. Some new contracts are with the new ASPs, and new ASPs are e ven more than $0.10 per watt. An important increase of more than 10%-15% in the last year.
Okay. I'll take the second question from Virginia. Good morning Virginia. How much of your tracker industrial revenues were intragroup? The quick answer to this particular question is the difference between the revenues generated by Soltec Industrial and the revenues generated by Soltec Power Holdings. Okay? Around EUR 60 million. Okay? Next question from Virginia. Of your pipeline with 100% probability, what is the timing to deliver? Well, it changes from period to period, but I would say most of it will be basically consumed, converted into revenues in 2022. There will be some periods that could continue at the beginning of 2023, Q1, but most of it will be executed during this year.
Which markets do you fear most delays in the industrial business? One, probably Spain and Italy, but it's already discounted. We know that license and permits are quite slow in Europe. As always, basically in Spain and Italy. I mean, we already took that into account.
Okay. The next one. How much of your backlog and pipeline is Powertis related? Well, as we explained during the presentation, EUR 20 million out of our backlog, which represents 8.5%, comes from Powertis. If we talk about the pipeline, the contribution from Powertis is EUR 874 million, which represents roughly 28.5% of the total pipeline.
Who is your largest client at the moment? In Industrial side of the business, mainly utilities like among others, Enel, AES, Acciona or even Total. Also for Total and also Aquila for the Project Development side of the business.
Next question. Powertis, what are your expectations in 2022, which market? Our expectation, anticipation is the level of rotation similar to this year 2021 in the same markets, mainly Brazil, Spain and Italy. There might be a possibility of Colombia, but right now these three markets would account for the bulk of the transactions.
Okay, we've got another question from Jorge Guimarães. José, you can go and do this one.
Yeah, I'll take this one. First question is, what is the main driver for the relevant increase in the value per megawatt of Soltec Industrial's backlog from EUR 0.129 million to 0.4, sorry, 14.5. Is it because it's increasing the average selling price due to higher costs or a result of a different geographical mix? I would say the answer to this particular question is twofold.
Firstly, obviously we have an increase in the average selling price. The cost-inflationary scenario we're currently living in has obviously caused average selling price across the industry to go up. This is a reality, and therefore there is a clear increase in the price per megawatt of our product, of the solar tracker. But in addition to that, we also have, as I mentioned before, additional contribution from other activities we perform in Soltec Industrial. Within these, basically activities, we have the tracker installation and other construction services.
Those activities typically have higher average selling price per megawatt than the tracker itself. That's why we have a higher average selling price overall. Okay? Now, second question from Jorge says, considering the Powertis guidance at EBITDA level, what would be the expected contribution at financial results level in 2022 from Powertis? I'm afraid the guidance that we're providing this year for 2022 is basically focused on EBITDA for Powertis. We would not be able to provide additional details for the guidance. Next question is for Pablo?
How much was the actual cash inflow contribution for Powertis transactions? These figures are reported in presentation. José , do you have any?
Yeah, it's basically the contribution that we are explaining, presenting in the presentation as EBITDA. The EBITDA's that we're showing from each individual transaction on slide 22 are basically the cash contribution from the different transactions. Okay?
I will take the next one actually. For 2022 guidance, the EBITDA contribution will all come from new rotation or also from existing rotation. It will come mostly from new rotations. We've been conservative here, and we just assume new rotations in 2022 guidance.
Okay, we've got another question from Berenberg. Pablo, let's go to you.
Yes. Are there any targets to grow Powertis pipeline further above the 10 GW level achieved for 2021? Do you hope to grow into new geographies? The answer to both is yes. We anticipate to increase the pipeline from 10 GW to 15 GW in the year 2022. Indeed, we will as well increase the geographies through the year. I will provide more details as the markets and the effort comes to fruition.
Okay, great. Thank you very much. We have no more questions on the platform at the moment. As we anticipated, we expect to release our strategic plan 2022-2024 on the 23rd of March in our Capital Markets Day. If you have any further questions, you can contact us straight away, Investor Relations Department. Thank you very much.