Rai Way (RWAY) Q3 2024 earnings summary

Executive summary

• Core revenues for the first nine months of 2024 reached €206.5 million, up 1.1% year-over-year, driven by both RAI Group and third-party customers, with third-party performance accelerating in Q3 and exceeding inflation-linked contract increases.

• Adjusted EBITDA increased by 2.7% to €142.2 million, with a margin of 68.9%, supported by revenue growth, cost control, and non-recurring benefits, offsetting higher start-up costs and loss of energy incentives.

• Net income rose 1.0% to €70.5 million, maintaining a 34.2% margin, reflecting higher depreciation, amortization, and financial expenses from investment activities.

• Recurring cash generation/free cash flow exceeded €95 million in nine months, surpassing the full-year 2022 value.

• Guidance for 2024 is confirmed, with management expressing confidence in continued execution, strategic diversification, and new edge data centers operational.

Financial highlights

• Core revenues reached €206.5 million (+1.1% year-over-year); adjusted EBITDA was €142.2 million (+2.7%), with a margin of 68.9%.

• Net income increased to €70.5 million; CapEx totaled €25.1 million, with €19.9 million for development/diversification projects.

• Net financial debt rose to €148.2 million from €104.9 million at year-end 2023, mainly due to investments and dividend payout.

• Cash conversion remained high at 94.0%–96.2%.

• Operating profit (EBIT) reached €103.9 million (+3.4% year-over-year).

Outlook and guidance

• 2024 guidance is confirmed, with expected adjusted EBITDA growth over 2023 despite lack of energy tax credits and new infrastructure setup costs.

• Maintenance and development CapEx are projected to remain in line with 2023 levels, with most development CapEx focused on diversification and digital infrastructure.

• First revenues from new services and edge data centers are expected in 2024, with a fuller pipeline for 2025.

• Revenue growth is targeted to double CPI contribution by 2027, with adjusted EBITDA to rise €24 million (+13%) over 2023 and recurring FCFE to reach ~€130 million in 2027.