ENGIE EPS 2018 RESULTS Continuous double-digit growth to initiate an industrial play within ENGIE’s new Roadmap
Carlalberto Guglielminotti, Chief Executive Officer at ENGIE EPS, commented “In 2018 ENGIE EPS posted an impressive growth with revenues increased by 57%, and thanks to ENGIE’s support a more than doubled backlog with a pipeline of over €300 million, maintaining a 30% gross margin. These results witness the intensity and commitment of the extraordinary people we have at ENGIE EPS. There are now hundreds of megawatts of microgrids and solar-plus-storage tenders around the world and together with ENGIE Solar we are positioned as top-tier player with a unique vertically integrated and turn-key value proposition. We will now focus on continuous sustainable growth as well as on our path to profitability. These results were achieved during a year where ENGIE EPS experienced a transformational change in its ownership structure, including a capital raise subscribed by old and new investors”.
2018 KEY FIGURES
Revenues amount to €15.5 million as of 31 December 2018, up 57% compared to the previous year. This growth is mainly due to positive developments in our core addressable markets: microgrids in islands and emerging countries, and grid support in developed economies – in both cases partnering with ENGIE. In particular, successful deployment of microgrids such as the Comoros, Somaliland, New Caledonia and Singapore. More importantly, growth is also due to grid-connected solutions in Europe with 24MW storage systems that went online in Spain, Italy and Belgium.
Pipeline as of the date of this Press Release increased by 101% compared to 28 March 2018, reaching €302 million. Order intake in 2018 has reached 41.3MW, representing approximately €10.9 million. This achievement confirms the effectiveness of ENGIE EPS’ business model in Southern Europe, Africa and Asia Pacific regions, which has enabled ENGIE EPS to accelerate its growth reaching a total of 46 customers in 23 countries across the globe.
Project Backlog as of the date of this Press Release corresponds to €52.4 million, an increase of 109% compared to 28 March 2018. ENGIE’s projects played a pivotal role, including a solar-plus-storage project awarded in partnership with ENGIE Solar representing 61% of the Project Backlog. This includes the total EPC value of such solar-plus-storage project whereas the related revenue recognition for the PV portion (approx. 55% of the Project Backlog) will depend on the final allocation of the EPC responsibilities between ENGIE EPS and ENGIE Solar.
In other terms, notwithstanding the retendering of the Armonia project in Palau announced on 15 February 2019, Project Backlog more than doubled compared to last year, and is currently comprised of €42.7 million projects on an EPC basis, and €9.7 million projects secured on a Power Purchase Agreement (PPA) basis, for which financing is currently under structuring.
Gross margin stands above 30%, despite an increase in project size and complexity.
Personnel costs increased by 24% reaching €4.4 million compared to the €3.5 million of 2017. This is due to the continuous intensity in R&D and a major commitment in undertaking business execution.
R&D investments amounted to €3.2 million, including expenses and capitalized amounts. These investments represent 20% of consolidated revenues and 40% of all fixed costs, confirming once more the strong commitment of ENGIE EPS in R&D and innovation.
Other Operating Expenses decreased by 24% amounting to €1.6 million compared to €2.1 million in 2017. This is due to cost rationalization and a more efficient internal organizational structure.
EBITDA loss amounts to €4.6 million in 2018 compared to the €1.7 million loss of 2017. This is mainly the consequence of the negative impact of scaling EPC and outsourced construction activities in view of the utility-scale focus. However, in 2019, ENGIE’s support and the partnership with ENGIE Solar could dramatically change the current outlook, given their experience gained through the 1.2GW of new solar PV awards on a worldwide basis. Overall, this should contribute to a more structured and sophisticated approach to EPC activities, enabling a sustainable path to profitability.
Net Result as of 31 December 2018 improved by 3% compared to 2017, from € -9.0 million to € -8.7 million. Non-recurrent items accounting for €2.6 million, which significantly affected the operating result and are mainly represented by non-recurring legal and accounting expenses linked to extraordinary transactions, namely the corporate change of control, the Mandatory Tender Offer and the Rights Issue carried out in 2018.
Net Financial Position at the end of 2018 increased to €6.8 million from € -12.3 million on 31 December 2017, mainly due to the €30 million capital increase and the growth in revenues, despite working capital and continuous investments in R&D. In this respect, ENGIE EPS has constantly been supported by Intesa Sanpaolo, which in February 2019 approved, subject to customary condition precedents for ENGIE group companies, an additional €7.5 million facility.
ENGIE EPS’ integration process within the ENGIE Group started in 2018 and resulted in a positive outcome. ENGIE’s contribution to business development represents 67% from a Project Backlog perspective and 79% at the Pipeline level. More importantly, hundreds of megawatts of microgrids and specifically solar plus storage projects will be tendered in the coming months around the globe, and ENGIE EPS with the support of ENGIE Solar is well positioned with a unique vertically integrated turn-key proposition. Microgrids and utility scale storage have been prioritized for development by ENGIE and will play a significant role in ENGIE’s renewable strategy plan.
In addition, during ENGIE’s Capital Markets Day held on 28 February 2019 in London, further emphasis has been given to ENGIE EPS’s positioning as a microgrid world market leader as well as future opportunities for microgrids and energy storage.
In this context, ENGIE and ENGIE EPS management teams will continue to work together to maximize synergies and determine the appropriate level of integration between their respective businesses.
Once the effects of such integration can be better assessed, ENGIE EPS will provide an update of its strategic plan for the 2020 and beyond over the course of 2019.