Hello. Good afternoon. This is Eduardo San Miguel. Welcome to this Q3 2021 results presentation that will be conducted, as always, by our Chairman, Juan Lladó. It will take something like 20 minutes, and you can pose your questions in the Q&A session that comes after the speech. Now I give the room to Mr. Juan Lladó.
Hi. Hello, everyone. I have a presentation that if I want to make it in 20 minutes, I'd like to make it in 20 minutes. I have to go fast and be precise. I'll try to go fast through my slides, and then if you need some color to this presentation, I'm sure you will get it through the Q&A session at the end. Okay, this presentation is structured basically in two points, is where are we today, you know, what are our Q3 results that you've already gone and read, that we are giving a guidance of end of the year of a break even.
That breakeven, how it has been impacted, because I think we've always talked about COVID and non-COVID, but I think now that we see it, you know, in the back of us, I think it's worth an analysis in what and what was the impact, you know, of our operations and how it has been impacted our sales, margin, and obviously cash position. Once we go through that, which are the numbers and the analysis of those numbers, we'll go to what I think is extremely important. How do I take to 2022, you know, and we move we forward? Why are we well-positioned and very well-resourced to benefit from these new awards in the market, you know? Then, a brief summary, we have to go through awards.
I mean, we're well-positioned because we have strong awards, quality, excellent quality, and worthy risk. You know, we came with the problems and excuses that started through the end of 2020 with all the big factors that we had been reprogrammed. Now it's just the opposite. We're sitting with our customers how we can bring, you know, all those jobs again to 2022. For many of the jobs they had moved forward to 2023. All those restarting, you know, jobs, which is close to EUR 4 billion, you know, it's a big figure, are being reprogrammed back to reality. Positively, let's talk of the future, because they're really, you know, extremely well-positioned in what we call energy transition. We have customers, we have contracts, and we're taking a very proactive role. Taking a proactive role is good, and we'll talk about that later.
Very important because now with the SEPI agreement that we do expect the funds to come in shortly, we're financially back where we were at the end of, you know, 2019, where we had, you know, organized TR to grow with the big backlog that we had. You know, these four points allow me to be positive and say that we are extremely well-positioned and well-resourced, you know, to go back to benefit, you know, growth and margin trend. That will be summarized on my outlook and guidance. The first part, as I said, Victor, is impacted by COVID. You know, sometimes I was a bit bored, you know, about this slide because, you know, it's one of those things that all of us think, you know, we've gone through. I think it's worth do an analysis.
You know, some companies had more impact, some others had less impact. You know, we happen to be the ones that had more because of the stage of the backlog that we've got and the stage of our project and where we had our projects, which in most cases were the Middle East. We had big impact in the managing of the site, mobilization and demobilization. I'll come up with an example afterwards. Obviously, big impact in managing the manpower and logistics. You know, lack of flights, visa problems, delays of equipment, quarantines. We'll give you some examples. Obviously the managing of subcontractors with the delays and claims. That translates into how do we manage the project? Which is at the end of the day, are we able to progress? Are we reaching the milestones? Are we getting paid? Well, billing has been difficult.
Billing at construction stage with the delays and not being able to reach milestones that we had by contract, it was very difficult. Some cases we have been successful in restructuring the milestones, some others not. Of course, today progress is back to the trend that it was before. Obviously that those difficulties can always be resolved if we have good customers in face-to-face negotiations. Extremely difficult through Zoom or through Teams or through, you know, all those new means that we are very proud of, which is good, but not to resolve conflicts. It's same with change orders. We have agreed lots of change orders with customers, and we're moving forward quite successfully with them. Those change orders will be translated in cash at the end of the project, as they always are.
There's all the impacts of our balance sheet and of our projects and working capital and cash. Site problems, manpower and logistics, and project management. I think this is extremely well explained with one example. Let's look at these graphs. This, to give you an idea, I don't want to put the name of the, you know, this customer is not here and the name of the project, but I can tell you it's in the Middle East. It's a billion plus by the size. It's a project that it was planned, and this is the first graph that it was planned by early 2021 to have manpower working on the site above 20,000 workers.
The reality is, at that time, we only had 5,000, and probably many of them under quarantine. Let's move on if you have so few people. What was their progress? Let's look into the blue line again, and let's go to the next slide. If you go to the same date, you know, early 2021, obviously the progress on that job should have been close to 80% with, you know, with the billing, you know, and the cash comes behind the progress. Obviously, the progress at that stage, early 2021, was only 20%. You know, and that is. With those two-three years, we had to manage the progress. We have to negotiate, obviously, with our customer, suppliers, and subcontractors. Let me give you some quick data. What does that mean?
It means that we had to manage in, on that very specific job, more than 1,700 positive cases on site. We had to manage quarantines of close to 6,000 workers in that same site. This is a realistic case. This is not theory. Which translates in more than 70,000 man days lost to those quarantines. Why so many quarantines? Because we had to do more than 500 PCRs a day. Well, we have to go through that, and this is one example that if you do an analysis, I don't wanna do it now in public, of all the jobs that we had in the Middle East.
What was the backlog of the jobs that we had in the Middle East, you know, and we had in Kuwait, you know, we had in Saudi Arabia, we had in Emirates, and we had in Oman. You know, you may imagine, you know, we've gone through difficult times. But let me tell you, difficult times extremely successfully managed by our team and with a good relationship with our customers. But with an impact in sales, an impact in cost, and an impact in cash. An impact in sales that is extremely well seen in this because the backlog is what it is. And you've known, and some people are saying, "Well, you have so few sales with such a big backlog." Well, I think it is very well explained in this slide.
If you go to end of 2019, we have a level of sales which was close to EUR 1.3 billion. At that, you know, we went to bed, let me tell you, at the end of that quarter, quite happy. You know, TR had gone through the oil and gas crisis and was back to growth. If you go to the last two quarters, we haven't reached EUR 700 million, which is give or take sales figure, you know, close to 40%-45% lower. It's not easy to manage a business when your sales figure, you know, lowers down to 40% what you had before. We've done it well, and that's why the break-even figure that translates in lower sales. It has an impact on margins.
Obviously, it makes the management of our working capital quite tight. Quite tight, as I think is reflected in the next slide. This quarter, we had a -EUR 91 million at the end of September. It was in September, it was already a month of recovery. It was a month where our plan was using all the collection from our customers, and we were ready to get back on business to pay our suppliers. We needed to run, to progress on construction, and to reach those desirable milestones with all our customers. That's what was our plan and continues to be in our plan as COVID, the real COVID, is behind us.
Obviously, with that plan, you know, if it's tight and we need to run, and the level of sales hadn't reached the level that we had before, obviously we can run through mismatches, and we run into mismatch. A mismatch of one day that, you know, cash collection of one day of $90 million that we readjusted as you see right below the - $91 million. You know, there was a collection of $90 million that we would have shown a figure or an adjusted figure so to speak. Although I don't want to use the name or the term adjusted anymore because I want to go back to reality of practically having a, you know, a break-even cash figure. That translating to the Q3 results.
Q3 results of a level of sales quite low. Quite low, as I explained before, you know, despite of the backlog and despite of the awards. You know, as progress was slow, has been slow through September. Improving now, little by little, but improving. An EBIT and a real EBIT therefore of zero. This is a break-even quarter. We do expect next month to have similar figure. You know, we do expect to finish the year with two break-even quarters. This is, you know, with that level of sales, this is the reality and this is the real non-adjusted account. This is non-adjusted EBIT result.
Good news that you know market has picked up, and the level of awards, order intake has improved substantially. In year-to-date, we do think we're gonna grow a little bit. We have $7.7 billion awards, which is way above $4 billion, which is very much you know the positive number, the good set of number that I was expecting to see now, you know, at the very beginning of the year. You know, we thought that the market was good.
I don't think I had much credibility when I was saying to the market that was challenging that I could reach EUR 4 billion, and those four billion are here, which give us the backlog, a very healthy backlog of EUR 10.4 billion. What? We have a breakeven two quarters, but we're back in business with a good order intake and a very strong backlog. The backlog that I think is worth, you know, to do some analysis. With that backlog, let's go with the second part of the presentation. Why are we well-positioned and well-resourced to benefit from this backlog and to benefit from this new market? First of all, because your franchise is healthy. It's very healthy, as it's been reflected in the EUR 4 billion of new awards.
If you go one by one, you can see the quality and how those awards was, in some cases, extremely de-risked. Two, because obviously it was difficult when you have awards, and we had in 2019 and to reprogram. It has an impact in your balance sheet, it has an impact in our resources, it has an impact in our cash. Well, now we're sitting with those customers. With some of them we have already concluded, and we're restarting the EUR 4 billion of reprogrammed projects. That's good news. That's the second reason that allow me to say that we're very well-positioned. Third, because probably 12 months ago, you know, energy transition was more a, you know, was more an idea than a reality.
Now it's a reality and if I was telling you 12 months ago that we were well-positioned because we had the know-how, we had the skills, we had the engineers. Now I can tell you that I have the customers, and that's those customers, and I have the projects, and very soon I have the sales and the margin. For that growth, we have the Spanish government. You have the Spanish government that confirms that they want to help us to grow and put us back where we were in 2019. That's the message. Those are the four main reasons why I'm positive and why I'm telling you that we are well-positioned to grow and go back to what is more important, to a real benefit, you know, to real profits.
We're talking about awards. Why I'm positive awards. I think this is like. I think it's a good one. This one is one of the ones that I really like. Well, also our business is very difficult to measure on quarterly sales. We've done it and this is like see what was the quarterly sales that started 2017 that we were having in this business. You know, obviously we have an average of way above EUR 1 billion, you know, and having, you know, sales of EUR 1.2, EUR 1.3. Very high level of sales. Way above EUR 1 billion, 1.3. Very good. Awards. Sorry, I'm saying sales but awards. Obviously, that's important. We were getting awards.
The pandemic came, and you see that especially over 2020 and early 2021, the level of awards were nil. Practically nothing. If you see now where are we today, what are the level of awards that we're getting, and we're getting now these last Q3, very important last Q3s, is we're back to our best years of award, to our very best years of awards. We're back on the market. When we're getting awards with old customers, new customers, very much is, you know, very much well-positioned in petrochemical, very well-positioned in gas. And an analysis of the jobs, very healthy de-risk. Let's do an analysis of those awards.
This is an old slide that has been, you know, putting in green all the jobs that originally two quarters ago I was presenting to you on the jobs that we thought we could be awarded for. Note they were awards, but they were well-positioned, either because we were selected by customers with no award or because we thought in the competition it's not strong enough. I mean, we were only two competing, and the likelihood of us was quite high. If you go through all of them, the ones in red are the ones that we've lost. We had put with no color on our previous presentation.
If you go through them, you see here are EUR 4.7 billion of awards, EUR 4.7 billion with new customers, in a market which is very important, very much focused in gas and petrochemicals, which are gonna grow, and we're gonna grow with that market. Everybody understands now that it's a big mismatch between supply and demand of gas and petrochemicals, and we're there. We're there with the old customers and with the new customers. Quite likely, in a few weeks, we'll have good news. We do expect that some of the jobs that we're very well-positioned for the end of the year and H1 of next year will happen soon. This is what I told you before, that it will happen, and it has happened. This is very important.
That's why I like to. It's a bit complex slide, but this is the trend of awards that have occurred, give or take, as we've announced to the market they could take place. Let's go to the next slide, which gives us an analysis of the backlog. In the analysis of the backlog, which justifies and explains when I say that, we're back to benefit, we're back to a healthy level of sales. We have a backlog that 42% of the backlog are what we call reprogrammed jobs, that we are negotiating with the customers to start again and to start soon. That will translate in sales into 2022. 35% is another EUR 4 billion, give or take, of new products. Some of them have already come into force, and some other we are in early works.
Has been awarded. We started with engineering, but they have not been put into force. As they are starting to come into force, and we start finishing engineering and moving to procurement, it will translate into sales. Sales will translate into margins, and we'll be back in a profitable business. 23% of the EUR 3 billion of jobs that have been executed, with very much most of them in construction. The ones that were engineering, it's easy to manage. Very easy to manage a job if it was a non-engineering job. You know, engineering companies have managed extremely well the moving to a non-essential engineering. If you have to manage construction, it was a different story. Unfortunately, we were very heavily affected.
With this split, I think I'm very comfortable to say that the sales ramp-up, you know, due to our reprogrammed jobs and new sales, is done this year. Therefore, we're back into our profitability with a good pipeline. Let's talk about reality. Let's talk about what we already have. Now let's talk about, you know, everybody wonders what is your strategy in this energy transition. To hear the message, I don't want to go through all those lines here. I'll go forever, and I'm not very good at it. That is, today, we can confirm that we are starting to be, if not we are, a relevant actor in this transition. We have real projects and real customers, not only, you know, not only proposals.
You know, we have real projects with General Dynamics, with Swisync, with Zar Foundation. We have with Repsol, with Acerinox, with Enagás. We have real projects, and we're becoming a real actor in this transition. We've done this in a complex year, let me tell you, where management had to focus in managing COVID, had to focus in managing jobs, had to focus in trying to collect from customers. In this transition, we have placed ourself and positioned ourselves very close already to a profitable business. We move a step forward, and that step forward is now we want to be and we are proactive, extremely proactive in this market. We know as we sit in with customers, as we sit in with infrastructure funds and helping and supporting them, and there is money.
There is money that our customers and ourselves, we need to capture. We're putting together a strong and aggressive strategy. A strategy trying to design with customers how to decarbonize their industries and their plants. Sitting with customers and sitting with new companies in developing green ammonia for low-carbon shipping technology. Sitting with customers and sitting with infrastructure funds in developing technologies and helping to escalate technologies, monetize methane emissions. Obviously sitting with customers, old customers and new customers and funds in developing the technology of electrolysis, you know, technologies. You know, trying to co-develop with some new and fresh companies, because they've got probably the bright idea, and we've got the know-how in trying to escalate that. The answer is we're taking a very proactive activity. We have structured ourselves as a very strong division.
The message, and I'm quite sure that we can. We want and we will be a very important catalyst, you know, to develop this technology. I'm extremely positive that very soon, and sooner than later, it'll be a very important division of Kia. Another stuff everybody's wondering, you know, the fourth reason why I'm positive. I'm positive because we have the support of the Spanish government. With the support of the Spanish government, I'm back where I was in 2018, when I was ready to capture a market and have a sales figure of above EUR 5 billion.
You know, SEPI, which is called, you know, Spanish government, through the support scheme that we will develop at the European Union, you know, confirms that we are strategic for the Spanish economy and supports us with EUR 175 million of hybrid equity loan, and with another ordinary loan of EUR 165 million. We do expect, as we're working very closely day to day with the Spanish government, that those funds will be disbursed, you know, before year-end. It's good news. You need the balance sheet. You need the strength. You need to give comfort to investors and customers. You need the backup, and we've got it already. That was the fourth reason why, you know, we are well prepared to go back to profit.
This translates into guidance. Obviously, it's the November 15th. On the November 15th, I cannot say that we're gonna, you know, this is gonna happen in three weeks. I mean, nothing is happening in three weeks. That's why I'm giving you a guidance of break-even from now to the end of the year. With sales which is going to be in the neighborhood of EUR 3 billion, if you cannot accrue the new backlog because you're still speaking with the customers, they will program jobs. Obviously you cannot. It is not translated into sales yet, and you cannot. It will not translate into margins in 2021.
It will definitely translate into margins, you know, as we move forward into 2022, the first quarters at a slower pace, with much stronger pace through the end of the year, which will give us an average margin above 2%, an average sales figure of above EUR 4 billion. That means, you know, a new award. That's true. It's not a challenge for me. I don't think it's too challenging having, you know, again, repeating awards of another EUR 4 billion. That's the guidance for 2022. It's not that challenging. It's doable, and we'll see the progress of this guidance as we move forward, you know, towards the second, third and Q4 of the year.
Obviously you might be wondering then, where you go forward, you know, as you get the new awards of, you know, and then move forward to stabilize the business on a sales figure of EUR 5 billion. We had it before. Awards of EUR 5 billion, we've done it before. I think the market and the pipeline is much stronger and far more demanding today than it was in 2017, 2018, and 2019. Much stronger. Far more stronger. Let me tell you, probably less risky. Less risky because of the pace of the demand. An average EBIT above 4%. You might be wondering if I'm being, you know, stingy, mean, or too prudent. Well, you know, we're the level of uncertainty still is great.
I've been managing this business for 20 years, and I think it's prudent to say that about 4% margin is doable, but I would not like to give guidance above that. You know, it's true that the new awards, they have good margin embedded. But I think 2023 is really far too long. I think I'm done. This is my last slide. It has taken me, well, 25 close to 30 minutes. I wanted to do in 20. But now, you know, any questions you may pose, you know, we'll try to answer them, you know, and give some color to this presentation. I'll answer them the better I can. Thank you very much.
Thank you. Ladies and gentlemen, the Q&A session starts now. If you wish to ask a question, please dial zero one on your telephone keypad. Our first question comes from the line of Alejandro Vigil from Bestinver Securities. Please go ahead.
Yes. Hello, Juan and Eduardo. Thank you for taking my questions. A couple of questions to start the discussion. One is about the midterm target of guidance of EUR 5 billion and 4% EBIT margin.
Which is the time horizon for this, for this kind of business environment? 24 months? More than that? Just what kind of mix are you expecting in this, in these sales in terms of energy transition projects? I don't know, 15, 20, 30% of a total? That'll be the first one. The second one is about the SEPI financial support. The final number is bigger than the one announced in July. Why is that? Second is in the statement, there is a comment about the potential equity commitment by SEPI in case of a capital increase. If you can elaborate on that. Is SEPI your anchor investor for a potential capital increase, and when could this be executed? Thank you.
Let me go one by one, but I think you're asking all the questions that everybody wants to hear with your three questions. Alejandro, thank you. Thank you very much for being here. Thank you very much for your questions. First question needs some guidance. I mean, I'm talking about our ambition, and I think at the case that we gave in the new and fresh backlog, the quality of the backlog and bringing forward, you know, the idea all those jobs that had been reprogrammed. You know, it's a number of 2023. I mean, we have to target a 2023 to go back to numbers and to margins that this business deserves. Then that's the guidance. That's 2023.
Thank you.
The mix itself of energy transition, I think, you know, there's gonna be. It's gonna have an impact, but it's not gonna be a volume business. There's gonna be very much. It's gonna impact in terms of margin. I don't know how much. Small, 10%, 15%. It would allow us to improve the margin, but it's going to be very much a service business at a reduced rate. It's a cost-plus business. As everything having to do with new technologies, new projects, it cannot be structured as an EPC, you know, obviously. Because it cannot. You cannot. I mean, you cannot put a price on a new technology having to do with hydrogen or having to do with. So it'd be either cost-plus or service.
It would allow us to manage the business, to develop our engineers, to catalyze the business and improve our margins. As you see, you know, profit and low level of sales, but it would not signify a large percentage of sales. Probably, you know, you will see an improvement of the margins as we start rendering good services related to this product. SEPI, why EUR 340 and not EUR 290 we had said before? You know, EUR 290 was, you know. In July, we decided to make it public, and we decided with our government to make it public probably. That was the number we were analyzing that we needed. That was the best number we could come out to put us back to where we were before.
Because we want to be back equity-wise, where we were before. For the same reason that the virus and the different variants are alive, the analysis we were doing, you know, very much with SEPI allow us to see that the good number was not EUR 290, and we started to EUR 240. You know, both things were alive. Costs have been alive. You know, we have gone through extra costs, and therefore the number has grown. I think this is the final and good number. It's an analysis. They're like two live figures, costs with the virus and then government support. The equity conversion as a catalyst, it has nothing to do with equity conversion, or it has to do with the catalyst. It is.
You know, SEPI is a partner with a hybrid for four years. Having SEPI as a partner for four years, we have talked. When we talk to customers, we have talked to customers in August, September, October and November. That is good. That is good to be partner of the government. Here what we have is the option in the near or future, more likely in the future term, once we pay back, once we're back by all means where we were before, to continue having a government partner with a small percentage, with a small equity, because some of our competitors have it. It's because we think that commercially speaking, may help us a lot, especially in a world that is changing extremely rapidly.
We have competitors in France, competitors in Italy, competitors in Korea, you know. It's an option. It's an option that we have today, and we don't want to have it in four-year times. It's a good option that we get from the government to support the growth of TR if we happen to need it. You don't solve anything with $35 million, but it gives us the health and the strength of having the support of the Spanish government. Let me tell you, many of our customers. Yeah, appreciate that.
Sorry to follow on this. It's not that you're planning, you know, a capital increase. It's just an option in the long term for SEPI to be part of this potential capital increase.
It is obviously the fund, the pure fund has to go to hybrid. If we have to, as to the terms we have to, and we plan to, and we're quite comfortable we will repay it back in four years, as explained before. We like to have the option, and the government agrees to it, to continue having SEPI as a partner.
Okay.
Because we do give credibility, and it put us in similar position to some of our competitors.
All right. Understood. Thank you very much.
The next question comes from the line of James Thompson from JP Morgan. Please go ahead.
Great. Good afternoon, Juan. Thank you very much for your presentation there. I have another question, but just following up on 100 questions there. In terms of the EUR 35 million commitment, I mean is this what you're saying is that this will be only decided at the end of the 4.5 years? Will it only happen if you also, at the same time, do some sort of capital increase at that time? I just wondered if you could confirm that is just a right at the end of the period type decision, firstly.
Again, let me be perhaps. We have no idea when are we gonna convert it, if ever. We have four years.
Okay.
It could be months, or it could be in four years' time. Today, we haven't got SEPI, I'm sorry, as part of our structure, but it's very well known we're gonna have it. Let me tell you, it's quite nice and healthy to visit our customers. You have to go through how many awards we've got in August, September, October, and November. We came to the conclusion they could be good. Could be good. We don't know. Let's see what happens to continue having them as a shareholder. Small shareholder, but as a shareholder. It may give some color. Yeah, just highlight the sort of customers that we have to serve.
Mm-hmm.
Huge national oil companies and very often requesting public finance, structured finance, export finance. Well, I think we thought that it's not very well developed. We thought it could give some color to TR's balance sheet.
Okay. Thank you. My question really was, I just wanted to talk about this kind of you know, firstly, improvement in margins. You know, when you're giving the presentation, obviously, you know, EUR 4.5 billion of projects there or thereabouts are obviously or have been reprogrammed or stopped and now need to be restarted. So I mean, I guess the question is, how have you or what confidence can you give us that Enagás has managed to negotiate to offset things like inflation in that we're facing at this point in time in these projects? You know, what sort of confidence can you give us that the EUR 4.5 billion are actually going to be able to generate margins as you head into kinda later parts of 2022 and into 2023?
You know, alongside that, you know, maybe you could give us a bit of a flavor in terms of, kind of, the working capital side of things or how cash should progress. I mean, if this is the case that these projects have stopped and are now restarting, you know, probably quite a long way from potential milestone payments, is it sort of fair to assume that, you know, we shouldn't really see much of an improvement in net cash until kind of 2023 type timeframe? Or maybe just some color about how you think that may well evolve over the coming quarters. That would be great. Thank you.
Obviously, I mean, we are sitting in this case with all customers. Customers for projects in Asia, customers for projects in the Middle East, customer for projects in North America. With some of them, we have already reached agreements with embedded costs. The embedded cost, which has been transferred to them, obviously has to do with inflation, has to do with materials, has to do with extra cost of having to reprogram again and launch the job. With others, we're very close, and with others, we're just beginning because they've just announced that they'd like to sit with us. It's for...
Let me tell you, it's much easier to sit down with a customer in today's market that you have a real job, and that has been reprogrammed to their benefit. It's much easier to sit down with them and see how you can accelerate that job and negotiate a contract or some payment terms, milestones, and costs than going to the market and trying to bid for a new job. You know, this is something that both customer, I'm not gonna name it, and supplier here have to sit down and agree. I'm quite confident that in some cases I already reach agreements, I couldn't name it with, and in some others, sooner than later we'll reach an agreement and accelerate.
That's, you know, it's a, you know. Having reprogrammed jobs and having to restructure yourself with an unwanted problem that we had. Now, obviously we have another problem that we have to sit down and renegotiate with them, but it's, you know, a better problem. It's an easier solution. If we happen to be successful, and we will, reprogram jobs and new jobs coming into force will translate into a far better working capital towards the H2 of next year, you know, as it was before.
The H2 of next year, I mean that seems relatively quick, I suppose if you've got kind of EUR 8 billion, if you include the new projects sort of just starting up now.
I mean, you have to realize the project has been awarded. From being awarded, you know, they have to come into force. When the project comes into force, you start doing engineering. Very little impact when you start engineering in terms of working capital, very little because you are accruing engineering. But as you move forward, you start reaching milestones, you have to place orders and it translates into a far better working capital structure, you know, on that very specific job. The same is gonna happen with the jobs that were reprogrammed and we sit with the customers to see how to accelerate. That's why I say it's quick. I mean, it's quick. We've been starting to work with them in October, and I'm talking about H2 of next year. It takes eight, nine months.
Okay. Thank you very much, Juan. Appreciate your answers and thanks for the presentation.
Sure.
Over.
The next question comes from the line of Francisco Ruiz from Exane. Please go ahead.
[Non-English content] I have two questions. The first one is still on the cash position. Do you think that with the current cash and maybe the recovery that you have just talked about in the H2 of next year will be enough to finance the strong ramp-up that you're gonna have? Okay, EUR 4 billion sales next year, EUR 5 billion sales on the following. Would it be easier to make a capital increase right now in order to be more comfortable to finance this expansion? The second question is if you could tell us if you have any significant impact from this scarcity of materials due to the price cost or how you are gonna deal with the raw materials inflation in the coming quarters.
Okay. Thank you, Francisco. Cash position, obviously we're getting EUR 340 million of cash, not equity, cash, pure cash. I think that put us in a very comfortable position to manage the growth in awards and sales. It's good. That's the analysis. That's why we ramped it up from 290 to 340. That's it. That's why I said in the full point that give me the comfort that today I have the awards, new awards are coming, and I'm back where I was, you know, with the huge backlog at the end of 2019. What. If the answer is this enough to achieve the year 2022 guidance? The answer is yes. Inflation of raw materials. You know, I'll show you the backlog.
If the backlog is, you know, the old jobs, the ones that were impacted, there is no inflation of raw materials. They're under construction. The ones that are being awarded, they've just seen price and there is no impact or very little impact of raw materials. Obviously in some of the jobs that have to be restructured or that has to be renegotiated, there is impact that we're seeking one by one, customer by customer. There are not that many customers, and there are not that many jobs to accommodate, you know, raw materials impact. You have to realize that, you know, some of those jobs, equipment was already bought. The equipment was bought, and they're being preserved in the site.
In some other bought material, which is something you buy at the very beginning, was bought, and some equipment was bought. You know, partially paid was bought. Even in the restructured jobs, a very large percentage of the impact in raw materials was already, you know, it was part of the job, it was already paid or was already agreed, was already closed or hedged. In the remaining one, now we're sitting with the customers to see if we can accommodate with a new way that impact. It's manageable.
Okay. No, very clear. Thank you very much.
The next question comes from the line of Kévin Roger from Kepler Cheuvreux. Please go ahead.
Yes, good evening. I would have two questions, please. The first one is related to the short term, because you are guiding basically for something like EUR 900 million of revenue for Q4 if you want to achieve the more than EUR 3 billion revenue in Q4. I was wondering if you can give us some metrics with us to confirm the recovery in your activity, because you were mentioning during the presentation the number of people that are confined, isolated, under quarantine, et cetera. Can you share with us some metrics in, let's say, this week compared to two months ago, to show what is the trend in your activity right now?
The second question, sorry for that one, but, I mean, you have been talking about a nice backlog, good quality backlog, et cetera, since quite a few quarters now. When you look at 2022, you are guiding for 2% EBIT margin, so far away from what you were expecting previously. So did you include in this 2% EBIT margin? What is, let's say, what are your main assumptions for this 2%, please?
Hi, Kevin. You know, you're talking about metrics, and I think in the presentation, the reason that I give you an example of one single job where we had to manage reduction from 20,000 to 5,000 workers with, you know, 6,000 workers under quarantine, that's one job. Do an analysis, I don't think I'm gonna start naming the different jobs that we had in the Middle East in similar situations. It's very difficult to come out with metrics. This is the real metrics. The important metric is we manage that, and we are successfully progressing in those jobs. We are successfully delivering those jobs. That's the important thing about these metrics. It's very difficult to come out with a real figure on a quarterly basis in this business.
It has been extremely difficult for us to anticipate if that was gonna happen. The metric of our guidance for 2021 is that this whole thing is passed or is passing, and that our jobs are progressing at an adequate pace. Our customers, we're negotiating with them to accelerate milestones, so we're getting paid. That allows me to say, okay, obviously I have six months to finish the year. With those metrics, I can finish this next quarter, you know, at a break-even basis. This is the important thing. That breakeven, my message is it's a positive breakeven. I mean, it's positive to finish at breakeven with a sales level as low as we've got. Take it, or at least I take it as good news.
Some analysts may not like it because there are EUR 6 or EUR 7 way above or below, but this is good news. We've managed this business under incredible uncertainty and stress. We've managed it extremely well. Very well. This is good news. The second question is the quality of the backlog. The quality is very good. The margin embedded in the backlog is good. But the sales figure would not increase with no ramp up. I mean, you know, in the last two quarters of 2021, zero, we cannot go too far. It will increase little by little. Our sales figure will increase, and we are able to accrue the new jobs. They have to come into force.
To give you an example, the big Qatar job that was awarded to us, and it's gonna be bigger than announced because we've already announced there are a lot of options that have to be included as the customer, you know, works with the other engineering companies. You know, it's we are getting paid starting at the engineering. We are getting paid, but still hasn't come fully into force because all the options have to be precisely reflected into the contract. The hourly job came into force, you know, at the end of September. You have to, you know, jobs take a while to come into force. They're good jobs. They're good projects. But we not be able to accrue those jobs with their embedded margin.
Let me tell you, they're good margins and very much de-risked until, you know, H2 of next year. It's gonna take a while. The good thing is we've got it. We have the backlog. TR franchise has remained as strong as before with a good level of awards.
Okay.
I don't know if I answered you correctly, Kevin, but I tried my best.
No, no problem. Thanks a lot for that.
Thank you.
We have one question left from Álvaro Lenza from Alantra Equities. Please go ahead.
Hi. Thanks for taking my question. First on guidance, you're looking for EUR 5 billion awards midterm. If I am not mistaken, you've only reached such an amount one year. What makes you confident that you can reach these, especially if you've stated that energy transition contracts will likely come with a lower size but higher margin? So that would be my first question. Second one is regarding the agreement with SEPI. The release, it says that you have committed to executing some kind of strategic plan that includes energy transition, diversification in different geographical regions and cost cutting and so on. I wanted to know whether this refers to the transformation plan that is already in place or whether you are working on another strategic plan with the SEPI.
Lastly, if we look at the net cash position, it has reduced by roughly EUR 180 million quarter-over-quarter, while the increase in working capital has only explained about EUR 150. There's a big difference. I understand that those EUR 90 million that you stated, that was just a one-day difference between collecting and not collecting it. That would be already included in the working capital. Other than the working capital, the reduction in cash seems significantly higher than your net loss. Whether you could provide some more color on whether you are paying off some of the provisions that you've done during the year, or what explains this decline in the net cash position? Thank you very much.
Okay, Alvaro, sorry to keep you waiting. The thing is, you know, it's really, I'm trying to organize how to answer you because you know, a mix of questions. The first one you're asking, you know, you're talking about our transformation plan and our project with SEPI or strategy with SEPI, whether it's the same or not. I'm not sure what the question is, but let me tell you, transformation plan is something we worked very hard in 2019, continued work in 2020, and you know, the strategy with SEPI, everything that we had working on transformation plan is already embedded in it. There is no difference between transformation and SEPI.
I mean, transformation is the plan of TR, you know, being able structure ourselves to grow and to become a far more cost-effective company. At the same time, provided that, you know, that we have some good auditors, how we could capture and de-risk part of the business, to capture some other markets and de-risk part of the business. It's not an obligation. It's a good plan, and it's a plan that we had before, and we have improved, and we have talked to SEPI, as we always do. That's the natural way of managing a business. The second question you were talking about guidance of the $5 billion sales figure.
Obviously, if you crunch numbers, if we have awards and they come into force this year above EUR 4 billion, and they're going to be above EUR 4 billion, and we have awards, only we have awards slightly above EUR 4 billion. Next year, by the time sales accrue, we're gonna be reaching EUR 5 billion in terms of sales, you know, only with the remaining backlog and the awards. EUR 5 billion, if we get those levels of awards, EUR 5 billion, we're gonna be very, very close, if not above. We've done it before for several periods. We had the backlog to do it.
You just only have to look at the level of sales that we had at the end of 2019 and try to play with those numbers and to see what would had been our level of sales with that backlog in 2020. It would have been. That's what I said many months ago, we had put the business. We've organized our sales for a business, for a level of sales way above EUR 4 billion. While it is a guidance, but it's a guidance that I do feel comfortable to reach. The last question has to do with the fall in cash, EUR 90 million, fall in working capital. I'm a little confused. All I can tell you, those EUR 90 million, there is a down payment.
They should have come in during the month of September, and for some reason, more administrative or bureaucratic, came in on the October 1st. I don't think it's part of the working capital. It's just a $90 million cash payment having to do with the down payment of a job that has just started. But if you want to get into detailed numbers, I would advise to you to call, you know, our investor relations and then you get into details because probably I'm not the right person to give you the best and detailed answer. Thanks a lot, Alvaro.
Thank you very much for the color.
As there are no further audio questions, I'll hand it back for any closing remarks.
Okay. Thank you to all of you for listening to the presentation. A bit longer than expected. I tried to rush, but I was not able to. Thank you for all the questions which, you know, help us and me in particular to clarify the presentation. Thanks a lot, and I'll see you for sure in three months time, February.