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Original-Research: Landi Renzo S.p.A. - von GBC AG

Einstufung von GBC AG zu Landi Renzo S.p.A.

Unternehmen: Landi Renzo S.p.A. ISIN: IT0004210289

Anlass der Studie: Managementinterview Letzte Ratingänderung: Analyst: Marcel Goldmann

08/08/2022 - GBC Management Interview with Christiano Musi, CEO of the Landi Renzo Group 'Landi Renzo Group is a global player specialised in energy transition along the full value chain, aiming to become a global point of reference for RNG and hydrogen applications for green transportation and clean tech solutions. By 2025, we expect an increase in revenues with a CAGR of 15%, and double-digit growth of EBITDA, expected to grow with a CAGR of 25%, thanks to increasing revenues in segments that have higher margins compared to our traditional market of light-duty applications.' Landi Renzo S.p.A. is a technology group that focuses its range of services on the growth sectors of 'Green Mobility' and 'Clean Technology/ Energy' (through a dedicated company called SAFE&CEC). Through this positioning, Landi Renzo is very much involved in the ongoing energy transition, which includes the transformation of the mobility and energy sectors, with a strong focus on hydrogen and biomethane application along the full value chain-from biomethane, hydrogen and CNG compression at generation for grid injection and transportation, to CNG and H2 filling stations, as well as components and systems for gas and hydrogen mobility. Landi Renzo Group (Landi Renzo) has recently announced the successful completion of the subscription period (subscribed volume: EUR 57.1 million; subscription price: EUR 0.53 per share) of the capital measure launched with a volume of up to EUR 60.0 million. The Landi family and Itaca Equity Holding have created a new controlling holding company in the Landi Renzo Group (Green by Definition), which in turn have subscribed to approximately EUR 35.2 million (approximately 59.1% of the total volume of the capital measure), with the current CEO of the company also participating in the capital increase as a co-investor. GBC has taken this as an opportunity to conduct an interview with the CEO of the company, Mr. Cristiano Musi, about the capital measure that has been started as well as about the current business development and the perspectives of the company. GBC: Mr Musi, the sharp rise in oil prices and the further intensification of the Ukraine conflict (keyword: less dependence on individual energy sources/suppliers) has given a significant boost to the field of alternative fuels and energies, such as hydrogen, biogas (RNG, Renewable Natural Gas) or LNG/CNG. What positive effects do you expect from this for your two business areas Green Transportation (gas and hydrogen-based mobility) and Clean Tech Solutions (compression solutions for gas and hydrogen infrastructures)? How do you assess the market environment for your company in general? What market trends can be observed? Mr Musi: As you have pointed out, clean energy sources such as RNG, hydrogen and CNG are playing an increasingly important role in the energy transition sector in which we are involved along the full value chain, with a broad range of products and applications, ranging from RNG compression solutions and hydrogen-grid injection and transportation to compression solutions for filling stations and key components and systems for gas and hydrogen mobility, for light, mid- and heavy-duty. It is a market with unprecedented growth in both Clean Tech Solutions and Green Mobility worldwide. Just to give some figures: - New repower EU expects biomethane production to increase tenfold, growing from 2021 to 2030 from 3.5 to 35 bcm, which will mean the building of 4,000 new RNG plants, which will require compressor systems. - There is momentum building for hydrogen, it being a gas which needs to be compressed to be used with production expected to grow from 70 to 196 MT, with more than 10,000 filling stations to be built by 2030, about 3,000 of which are expected to be built by 2025 At the same time, green transportation gas and hydrogen represent a fuel fundamental to reducing CO2 and other pollutants. In particular, our traditional business of gas mobility for light-duty for both OEMs and After Market is stable with some markets growing by double digits such as India, while the penetration of RNG/CNG and LNG in mid- and heavy-duty is expected to growth roughly threefold from 2020 to 2025, with hydrogen also starting to grow. This is the case because, as a matter of fact, gas is today the only feasible solution to replace diesel for mid- and heavy-duty, with hydrogen gaining momentum. GBC: The EU is generally regarded as a pioneer in environmental and climate protection and is pursuing ambitious climate protection goals. To what extent can Landi Renzo benefit from the tightening environmental and climate protection policies of the European community and other countries? And what role does your technology group generally play in the so-called energy turnaround so that individual countries and regions can achieve their environmental and climate protection goals? Mr Musi: Landi Renzo is reaping benefits from different aspects, regarding both infrastructure (Clean Tech Solutions) as well as Green Transportation. In Europe there are important ongoing investments in biomethane and hydrogen, with natural gas also playing a very important role and the market for SAFE&CEC growing in terms of revenues and backlog year by year by more than 15% also thanks to innovative product development carried out by our group, such as innovative compressor solutions for reverse flow for GRTGAZ in France. On the mobility front, Europe is still a very important market for light-duty and is growing on heavy-duty gas application, with almost all OEMs approaching hydrogen technology. We are partners with many OEMs that use our components and are our partners in new development. Just as an example, we have recently worked with IVECO in designing a system called Hytene, where CNG/RNG/LNG is mixed with hydrogen for their vehicles, with incredible advantages in terms of CO2 emission as compared to diesel vehicles. It is a system with high value added for end users. It is a system which we believe presents the opportunity for a great deal of further development. GBC: The Landi Renzo Group generally pursues a growth-oriented corporate strategy. Please briefly explain the current strategic focus of your company and, within that, the growth plans (new business plan 2022-2025) that you are pursuing with Landi Renzo. Mr Musi: Since its foundation, the group has been growing constantly both organically and inorganically. Today Landi Renzo Group is a strategic platform acting in the energy transition, leveraging on its cash flow businesses to sustain future business growth. Our strategy is focused on: - being a global leader in gas and hydrogen pressure management and fueling systems (Green Transportation segment) - being a global leader in the field of alternative compressor solutions for CNG, RNG and hydrogen (Clean Tech Solutions segment) - increasing exposure to growing markets for LNG/CNG and hydrogen for heavy-duty trucks (Green Transportation segment) Our advantage is based on the fact that we are already present in all these segments, with consolidated and innovative technology, also thanks to the acquisitions we have recently completed, such as the acquisition of Metatron, a leading provider of components for pressure management and feeding systems for mid- and heavy-duty mobility for both gas and hydrogen and Idro Meccanica, a leading supplier of hydrogen compression systems, with more than 150 hydrogen compressors already working on different applications, from industrial to filling stations. We want to make use of our experience and new acquisitions to continue growing in a very interesting market scenario and, by 2025, we expect an increase in revenues with a CAGR of 15%, and double-digit growth of EBITDA, expected to growth with a CAGR of 25%, thanks to increasing revenues in segments that have higher margins compared to our traditional market of light-duty applications, which is, incidentally, an important source of revenue (cash cow business) for us. Moreover, we want to work on improving our operational model, also strengthening our organisation and bolstering our top management team, as well as getting full synergies from the integration of the newly-acquired companies in our group, with savings of around six to seven millions euros expected. GBC: In recent years, the Landi Renzo Group has significantly strengthened its market position in the various growth sectors in which you operate through targeted acquisitions. How do you currently assess the market positioning of your two business areas and what potential do you see in both sectors? Mr Musi: Actually, we have dominant market share in the segments where we are active, from light-duty gas mobility application where we estimate we have a market share of about 30% worldwide, to pressure-regulation management systems for mid- and heavy-duty gas and hydrogen where we have an estimated market share of more than 50% as well as alternative compression solutions, where we have an estimated market share of about 30%. These results have been achieved because of our historical presence and thanks to the M&A strategy pursued by the group over the last few years. But we continue to see interesting opportunities, both for organic and inorganic growth. Thanks to recent acquisitions we have also completed our portfolio for hydrogen, and now we will focus on business development, with high opportunities for organic growth, also thanks to the growth of the market. At the same time we will be ready to play a role in consolidation and in reinforcing our presence in high-growth markets, such as North America, if there is the right opportunity. GBC: You recently announced the successful completion of the subscription period (subscribed volume: EUR 57.1 million) for your initiated capital measure with a volume of up to EUR 60.0 million. What was the background for this step and for what specific purposes are these financial resources to be used? Mr Musi: This capital increase has different objectives. First of all, we completed the strategic acquisitions of Metatron in 2021 and of Idro Meccanica at the beginning of 2022 financing with debt. So, with part of the proceeds, we are going to refinance these acquisitions at equity. Furthermore, we have decided to bolster our capital structure to be able to sustain further development. On top of the capital increase, there is the entry of a new minority but strategic shareholder, Itaca, which will support the majority shareholder, the Landi family, in sustaining the development of the group over the long term. GBC: As part of your capital measure, you also added a new well-known investor, Itaca / Tamburi, to your shareholder group. How should this new investor be classified in general (investment horizon, investment focus, etc.) and will it also support the long-term growth ambitions of your group? Mr Musi: Last March, the main shareholder, Girefin S.r.l., together with Gireimm S.p.A., announced an agreement for a strategic deal with Itaca Equity Holding, a leading Italian private equity company, backed by Tamburi Investment Partners and by major Italian family offices. The Landi family and Itaca have established a new controlling holding of Landi Renzo Group (Green by Definition), which in turn had entered into a subscription commitment of up to EUR 50 million. The majority will be maintained by the Landi family, but Itaca is an important and strategic shareholder that will support group transformation, bringing their know-how from both the financial and industrial sectors. They are strategic investors, looking at mid- to long-term value creation, such as is evinced by the history of Tamburi Investment Partners, who have a uniquely successful track record in working together with mid-sized companies and helping them to accelerate growth and value creation for all stakeholders. GBC: Based on your consolidated business figures, the Landi Renzo Group achieved an increase in consolidated turnover and EBITDA to EUR 241.99 million (PY: EUR 142.50 million) and EUR 12.62 million (EUR 6.65 million) respectively in the past business year. How would you sum up the past financial year? Which particularly important goals were achieved? Mr Musi: These figures take only partially into consideration the SAFE&CEC consolidation and the Metatron acquisition. Moreover, they do not take into account our Indian figures with KLR. I'd say that as a group in 2021 we achieved about EUR 300 million in revenues and about EUR 23 million adjusted EBITDA. Nonetheless, 2021 was still impacted by the long wave of COVID, even if we had recovered from 2020, but it was mainly a strategic year for us because of the transformation we had started thanks to the acquisition of Metatron and Idro Meccanica. Thanks to these acquisitions we now have a full presence in the mid- and heavy-duty transportation segment, with a full range of gas and hydrogen components and, thanks to Idro Meccanica, we have a full range of hydrogen compressor solutions, with an installed base of about 150 hydrogen compressors already working on the market, which is on top of the installed base of 6,000 RNG and CNG compressors from SAFE&CEC. GBC: What can investors expect from the Landi Renzo Group in the current financial year 2022? What goals or targets have you set for yourself (corporate guidance)? Mr Musi: Considering the general situation, we have not released corporate guidance. By the way, we expected improving performance compared to 2021 in both the Green Transportation and Clean Tech Solution segments. GBC: Where do you see the Landi Renzo Group in the next three to five years, especially in terms of business regions, product range and business volume? What is your overall vision for your technology group? Mr Musi: Energy transition will be at the centre of international interest in the coming years, with a huge investment focus on decarbonisation. CNG, RNG and H2 will play an increasingly important role, as is becoming clearer day by day. Landi Renzo Group is a global player specialised in energy transition along the full value chain, aiming to become a global point of reference for RNG and hydrogen applications for green transportation and clean tech solutions. We expect a significant growth in volume, especially in mid- and heavy-duty and off-road applications as well as in the compressor markets for CNG, RNG and H2 and our goal is to strengthen our competitive positioning and market share, leveraging our innovative product portfolio and technical know-how as well as the strength of our brands and our global presence. We will also work on operational efficiency, keeping our capex stable thanks to the investments already made, with a focus on cash generation. I strongly believe Landi Renzo has a unique opportunity to be a strategic platform in energy transition, leveraging its cash-flow businesses to sustain future business growth, with strong opportunities for value creation for all our stakeholders. GBC: Mr Musi, thank you very much for the interview.

Die vollständige Analyse können Sie hier downloaden: http://www.more-ir.de/d/24767.pdf

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