ENGlobal Corporation

Enagás reported Q1 2024 after-tax profit of EUR 65.3 million, up 19.5% year over year, and EBITDA of EUR 178.3 million, up 2.7% year over year. Revenues were described as in line with Q1 2023. Net debt was EUR 3.342 billion, similar to 2023, and more than 80% of it was covered by fixed-rate hedges. For the full year, management reiterated net profit of EUR 260 million-EUR 270 million, EBITDA of EUR 750 million-EUR 760 million, net debt around EUR 3.4 billion, core operating expense growth capped at around 1% CAGR for 2022-2026, FFO/net debt above 14%, and a 2024 shareholder payout of EUR 1 per share.

Arturo Aizpiri framed the quarter as strong execution against the strategic plan, with progress in Germany, hydrogen infrastructure, and cost discipline. He stressed that Enagás is moving from planning to execution on hydrogen, citing PCI designations, H2Med study awards, and the creation of the Hydrogen Technology Observatory. His tone was confident and constructive, emphasizing that the company is entering a new investment and growth cycle with “rock-solid foundations.”

Luis Romero focused on the financial drivers behind the quarter and on the outlook for returns. He said the Q1 tax rate of 11% reflected a Tallgrass corporate tax regularization with a positive impact of nearly EUR 2.8 million, and he noted an extraordinary financial effect tied to delayed interest collection, which should not repeat through the year. He guided to financial results of around EUR 100 million for the rest of the year, said 2024 hydrogen infrastructure investment should be about EUR 170 million with EUR 40 million already invested, and outlined possible return assumptions for the next regulatory period, including a pretax FRR approaching 7% to 8%, cost of debt around 2.7%-2.8%, and a leverage ratio near 40% in peers’ frameworks.

Analysts focused on regulation, hydrogen returns, the timing of the strategy update, Peru arbitration, and the impact of possible gas plant closures. Management said it is in constant dialogue with the regulator and wants a remuneration framework with a pretax return around 7% to 8%, comparable to European peers and supportive of hydrogen CapEx; the strategy plan update is expected in the second half of the year and will include roughly EUR 3.2 billion net of hydrogen CapEx for 2026-2030. On Peru, management said the GSP arbitration award is expected in the first half of the year and claimed the full USD 511 million invested; it also said any cash unblocking there should be more than offset by lower debt costs. On financials, the company said a Q1 one-off tied to delayed interest collection and Tallgrass tax regularization should not repeat.