Tesmec

Investor Presentation • Nov 4, 2022

Integrated Solutions Provider

2022.9M Results Presentation

• 1. Tesmec Group at a glance
• 1. Key Market trends & Corporate strategy
• 1. 2022.9M Business highlights & Results
• 1. Outlook
• 1. ANNEX

0. Tesmec Group at a glance

PURPOSE

Consolidate the position as a solution provider in the reference markets driven by the trends of energy transition, digitalization, and sustainability.

Vision	Mission	Value proposition	Strategy
To be a technological in a changing partner world	To operate in the market of for the infrastructure transport of energy, data and material (oil and derivatives, gas, water).	To supply added-value integrated solutions for our customers	 Innovation  Integration  Internationalization

ENERGY AND DATA TRANSPORT

Tesmec Group at a glance

ENERGY - STRINGING

• Solutions for power lines construction & maintenance
• Advanced methodologies for automating jobsite
• Zero emissions machines

ENERGY - AUTOMATION

• Telecommunications solutions for HV Grids
• Grid Management: protection and metering solutions
• Advanced sensors for fault passage indication, protection and monitoring

RAILWAY

• Catenary lines construction & maintenance
• Diagnostic vehicles and systems
• Integrated platform for safe infrastructure

TRENCHER

• Telecom networks, FTTH & long distance, power cable installation
• Oil & Gas, Water pipelines
• Bulk excavation, Quarries & Surfaces mining

1. Key Market trends & Corporate strategy

Strategic ESG growth path

Sustainability - Strategy & Execution

ACTIONS TO BE PERFORMED

Give priority to sustainable innovation and meet the Technical screening criteria of the EU Taxonomy

Set and integrate ESG criteria in the business plan 4th November 2022 8

Calculate the carbon footprint of the organization and implement actions to reduce it

Commitment to this target

Follow up on the several ongoing initiatives both for employees and for stakeholders

Increase engagement in sustainability practices

Strengthen the organization's governance around sustainability challenges and opportunities

Making every department accountable to sustainability

Sustainability as key strategic driver

PRIORITY TOPICS	TASKS (in progress or delivered)
Ethic and sustainable governance	 Growing involvement and awareness on sustainable governance both in Italy and among the foreign subsidiaries of the Group  Strengthen of the sustainability team in order to properly face the increasing opportunities
Green & digital solutions	 Sizing the businesses that are associated with environmentally sustainable economic activities in compliance with the European Taxonomy Regulation  Priority to green innovation and actions to meet the Technical screening criteria of the EU Taxonomy Regulation  R&D focused on electrification and digitalization of equipment to reduce the carbon footprint
Climate Change and environmental protection	 Sharing the ESG commitment with major suppliers  Actions to correctly manage the use of resources, promoting the reduction of direct and indirect environmental impacts
Development of local communities and areas, enhancement and protection of people	 Workplace Health Promotion – WHP project  Charity initiatives for local communities and non-profit organizations  Continuous training program for skills development and professional growth

European Taxonomy Regulation 2020/852 – Fiscal Year 2021

ANNEX I – Climate mitigation

3.Manufacturing

• 3.1 Manufacture of renewable energy technologies
• 3.3 Manufacture of low carbon technologies for transport
• 3.6 Manufacture of other low carbon technologies

2021 is the first year of application of the European Taxonomy. For this reason, the below findings are based on currently available information, which may be subject to future revisions also based on the evolution of the legislation.

Corporate & Sustainability - Key Facts 9M 2022

KEY FACTS

• Participation in international exhibitions launching new sustainable solutions in line with the "innovability" strategy of the Group
• New ISO certification for the subsidiary in New Zealand
• Tesmec has become member of the Intellimech consortium
• Promotion of sustainable ways of working among employees

INNOTRANS - Sept 2022 Great success in Berlin for the innovative solutions presented in the field of sustainability and diagnostic

Marais Laying New Zealand is now ISO 14001:2015 45001:2018 and 9001:2015 certified. This achievement demonstrates the strong commitment to providing high safety standards.

Let's Innovate Together Towards Smart Factories

Tesmec has become member of Intellimech, the consortium aimed at interdisciplinary research in the mechatronic field

Initiatives to raise awareness on conscious use of energy & sustainable ways of working among employees. Environmental training starting within the end of the year

Trencher – Key Facts 9M 2022

KEY FACTS

• Consistent rebound of the US' market with high opportunities
• High opportunities in the European market
• Georadar Explorer 2.0
• Business concentration in Arabic Peninsula activity

Market in the US has seen a consistentt rebound, leading to a steep increase in activity, revenues and market recognition

Tesmec focused on the European market, achieving important results in terms of sales and revenues

Georadar is an ultrahigh-precision ground mapping radar that was developed in order to ensure the safety of construction sites and increase the speed of construction work

Business in the Arabic Peninsula continues to bring results, especially in Qatar and Saudi Arabia, thanks also to the local presence

Energy Stringing - Key Facts 9M 2022

KEY FACTS

• Consolidation of existing markets
• New business model for Service & After-sales
• Supply chain reinforcement to gain competitiveness
• Stringing event: Safety, Sustainability, Efficiency of infrastructures installation

Significant orders acquisition with supply planned by the end of the year.

Supply chain reinforcement to gain competitiveness

New business model to reinforce service and after sales support.

Stringing event with agents, partners and customers. Conferences and demos to present new safe, sustainable and efficient solutions.

Energy Automation - Key Facts 9M 2022

KEY FACTS

• Significant steps forward in the Substation Automation segment
• Completion of strategic projects through the successful integration of existing products
• Strong promotion and participation to new tenders to launch the latest technology solutions
• Lasting postponement in delivery plans due to critical supply chain
• New product validation and mass production start-up

Strategic milestones reached in the development of Substation Automation systems

Consolidation of existing markets through robust sales initiatives and new awarded tenders

Participation to industry exhibitions and conventions to promote the latest technologies and strengthen our brand identity

Positive closing results with significant efforts to keep the supply chain under control and guarantee reliable and sustainable delivery plans

Rail - Key Facts 9M 2022

KEY FACTS

TESMEC SPEEDS UP ITS GROWTH ON THE DOMESTIC AND INTERNATIONAL RAILWAY MARKET

• Contract awarded with TCDD, the Turkish National Railway Authority.
• Contract awarded with NRIC, the Bulgarian National Railway Authority.
• Tesmec received the notice of the final award from FER, Ferrovie Emilia-Romagna
• Attendance to InnoTrans, the key event in the railway sector

Turkey - Contract awarded with TCDD, the Turkish National RailwayAuthority, for the supply of one diagnostic vehicle integrated with measuring systems on board.

Bulgaria - Tender awarded with the Bulgarian National RailwayAuthority NRIC for the supply of n°20 certified vehicles for catenary installation and maintenance.

Italy - Notice of the final award from FER, Ferrovie Emilia-Romagna, for the supply of a multipurpose vehicle suitable both for the catenary maintenance and the diagnostic of the railway infrastructure.

InnoTrans Fair, Berlin Milestone to present the Artificial Intelligence applied to the diagnostic of rail and civil infrastructures. AI & machine learning on cloud digital platform for the automatic validation of defects.

2. 2022.9M Business highlights & Results

GROUP (€ mln)	2022.9M	2021.9M	Delta vs.21
REVENUES (1)	173,5	144,2	20,3%
EBITDA (2)	25,9	21,2	22,4%
% on Revenues (3)	14,9%	14,7%
EBIT	9,7	4,8
% on Revenues	5,6%	3,4%
Differences in Exchange (4)	8,2	2,0
% on Revenues	4,7%	1,4%
PROFIT (LOSS) BEFORE TAX	14,0	3,2
% on Revenues	8,1%	2,2%
NET INCOME/(LOSS)	9,2	2,0
% on Revenues	5,3%	1,4%
GROUP (€ mln)	2022.9M	2021.9M	Delta vs.21
NFP ante IFRS 16 (5)	102,5	94,6	-8,3%
NFP post IFRS 16 (5)	125,8	116,5	-8,0%

• (1) Revenues: 20% increase in sales mostly thanks to Rail (for new projects and internationalization) and Trencher (particularly in the US and Arabian Peninsula markets)
• (2) EBITDA: 22% increase mainly thanks to Rail (for better mix)
• (3) EBITDA Margin: Despite the 2022 costs increase the EBITDA % is in line with the previous year thanks to recurring activities with high margin and to better mix in Rail
• (4) Positive contribution by ForEx at financial charges level

Memo: Net interest: increase from 3,6 € Mln of 2021.9M to 4,0 € Mln of 2022.9M

(5) NFP increasing by 9,3 € Mln against a 16,2 € Mln increase in NWC (higher credits as result of sales increase and higher inventories to face the worldwide criticalities in the supplying and shipment activities and supporting the continuous growth, in particular for the year end)

2022.9M Closing – Business Breakdown (€ mln)

Revenues growing by 4% compared to 2021.9M, amid difficulties in the supply chain, within perspective of solid Energy industry growth trend

EBITDA: highly impacted by utilities, raw material and freight cost increase, with higher effect on the Stringing segment. Process of price revision initiated

> Backlog at Euro 101,7 million, of which Euro 76,6 million for Energy Automation

> Revenues growing by 17% compared to 2021.9M, thanks to the rebound of the US and Arabic Peninsula market

EBITDA: growing in absolute terms but decreasing in relative terms, due to higher commercial costs (travels, fairs), business organization strengthening and charges relevant to Saudi Tesmec (controlled at 65% from September), with variable costs increase offset by positive ForEx/mix impact

> Backlog reached Euro 79,0 million

Revenues growing by 60% compared to 2021.9M thanks to higher medium-long term contracts/ progressive internationalization

EBITDA: more than doubled in absolute terms, with strong increase in relevant terms due to better mix (products' range shifting towards higher marginality/value added solutions, e.g. diagnostic) and to price variations

> Backlog hugely increased at Euro 129,3 million

BACKLOG

2022.9M Revenues: sales spread over different geographical area

REVENUE BY GEOGRAPHY 2022.9M

REVENUE BY GEOGRAPHY 2021.9M

ITALY: railway, trencher & energy automation impact USA&EU: trencher impact BRICS: trencher and stringing impact

Recurring: Rental, Projects, Spare Parts, Services (maintenance, revamping & refurbishing, consulting & training), long term backlog (Automation & Rail)

Non recurring: Sales of goods

2022.9M EBITDA evolution by BU

€ mln

2022.9M Financial Results

Financial Information (€ mln)	2022.9M	2021
Net Working Capital	92,7	76,5
Non Current assets	84,8	79,6
Right of use - IFRS 16/IAS 17	21,3	23,4
Other Long Term assets/liabilities	16,2	14,2
Net Invested Capital	215,0	193,7
Net Financial Indebtness	102,5	96,6
Lease liability - IFRS 16/IAS 17	23,3	24,5
Equity	89,2	72,6

2022.9M Working Capital evolution

€ 60,8 mln

€ 76,5 mln

2022.9M Net Financial Position Evolution

Before ΔNWC (ref. pag. 28), generation of positive free cash flow (for OFCF more than offsetting capex and change in consolidation perimeter)

2021

2022.9M

2022 Net Financial Position Evolution

NFP ante IFRS 16 IFRS 16 4service NFP impact

From 1st January 2019, the new IFRS 16 has been introduced, the impact in term of NFP is around 23,3 M€, otherwise the NFP would have been around 102,5. Since April 2020 the NFP included the financial debt from the acquisition of 4service around 8,0 M€ (of which 8,7 M€ related to the IFRS 16) at 30 September 2022.

1. Outlook

Outlook

MACRO ECONOMIC SCENARIO	MAIN ACTIONS to support the growth
 Inflation speed up  Increase of raw materials & commodities costs and freight & logistic costs  Increase in utilities	 Reverse the inflation on selling price of products and services, negotiating the review of the medium-long contracts with public administration and with cost efficiencies
 Shortage of materials, longer delivery time	 Diversification of the suppliers, rationalization and better cost/revenues ratio
 Uncertain geopolitical context, due to the Russian invasion in Ukraine, but partially compensate by the booming of specific geographic areas	 Cover the criticalities regarding the exchange rate  Face the conjunctural situation in Russia-Ukraine, focalizing on other country with high incoming opportunities (i.e.: Middles East, U.S.A.)
 Positive impact of recovery plans on reference markets of the Group:  ITALY: strong push to business thanks to incentives, especially in Southern Italy  EUROPE: important stimulus packages to boost the recovery  USA: focus on Clean Energy and big high speed railway projects	 Focus on strategic sectors driven by the energy transition trend  Green innovation and process digitalization
 Strong impact of sustainable projects and climate change issue in the development plans worldwide

2020-2023 Business Plan guidelines

	2019pf	2020pf	2021	2022		2023
TURNOVER	199,6 M€	172,8 M€	194,3 M€	>240,0 M€	>> Significant performance of the Energy Automation segment; Stringing segment back to historical performances >> Focus on recurring revenues (rental & services) >> Growth in each business line >> Price lists variation and review of the medium-long term contracts (actual context)	~ 275 290 M€ cagr : 19-23 8.5%~10.0%
EBITDA	30,0 M€	22,9 M€	28,1 M€	>16%	>> Better mix of products & systems, premium price policy, impact of new high margin activities such as rental and hi-tech solutions >> Rationalization and standardization of the products portfolio >> Broadly stable fixed costs and review of the price lists and the medium-long term contracts >> Facing the price variation with alternative suppling solutions, new applications and reversing the cost to the price	~ 53 58 M€ cagr : 19-23 17.0%~18.0%
NFP	130,0 M€	104,4 M€	121,0 M€	Improvement	>> Net working capital improvement and efficiency actions on inventory >> Optimization of credit management policies >> 2020-2023: Cumulated Capex in 4 years 75/80M€ (including 2021 variation), progressive reduction to 5% of the CAPEX/Revenues	Improvement

Trencher – Outlook 2022: Business Guidelines

OUTLOOK Q4 2022

• Further development in Arab Peninsula
• BAUMA 2022 - On the road to zero emissions
• Stocks to guarantee business continuity
• Presentation of E-Sidecut

Tesmec is strenghtening its presence in the Arabian Gulf area, to provide specialized service for the upcoming development projects in the area

Tesmec attends Bauma 2022 and presents the latest integrated solutions smart sustainable and systems digital connected

The shortage of raw materials and semifinished products continues to be a difficult challenge, which Tesmec is tackling thanks above all to flexibility, knowledge and stocks

The evolution of the SC4P to the E-Sidecut (a fully electric trencher) is a demonstration of an electrification path to zero-emission urban jobs.

Energy Stringing – Outlook 2022: Business Guidelines

OUTLOOK Q4 2022

• Focus on Electrification & Sustainable solutions
• Participation to Bauma with our latest technologies
• Demos to promote new products
• New innovative development streams

Enlargement of full electric machines range for Distribution.

Participation to Bauma to share our latest technologies with focus on underground solutions.

Push on new full electric technologies.

Focus on new innovative development streams.

Energy Automation - Outlook 2022 : Business Guidelines

OUTLOOK Q4 2022

• Significant challenges related to high backlog and production loads
• Consolidation of existing markets and new tender participation
• Attendance in international events to expand business network and promote the latest technology solutions
• Strong focus on sales promotion of new strategic products

Completion of new products validation with positive effects on the quarter results

Consolidation of new market channels through active sales promotion and effective marketing communication

On-going activities to certify the entire product portfolio according to the latest cyber security standards (IEC 62443)

Strong focus on Substation Automation developments to reach project milestones on time

Rail - Outlook 2022: Business Guidelines

OUTLOOK Q4 2022

• INTERNATIONALIZATION OF THE BUSINESS
• GREEN TRANSITION
• INTEGRATED SOLUTIONS FOR CATENARY INSTALLATION & MAINTENANCE • INTEGRATED DIAGNOSTIC SOLUTIONS: CONSOLIDATED VEHICLES & SYSTEMS

Internationalization of the business

Export the business from Italy increasing the portfolio of key clients: participation to domestic & international tenders.

• Tesmec awarded strategic tenders, which results were part of the backlog 2023.
• AS IS 3Q 2022
• TO BE FORECAST 2H 2022
• 50% Italy
• 50% International

Artificial Intelligence applied to Diagnostic

• 45% Italy
• 55% International

Green Transition

…to Full Electric, Bimodal and Hybrid technologies

From a standard centralized diagnostic platform with the

operator….

AS IS TO BE

..to AI applied to diagnostic vision systems to identify and validate defects on railway infrastructure for a safety & reliable network

diesel engines…

4. ANNEX

Summary 2022.9M Profit & Loss statement - Appendix A

Profit & Loss Account (Euro mln)	2022.9M	2021.9M	Delta vs 2021	Delta %
Net Revenues	173,5	144,2	29,3	20,3%
Raw materials costs (-)	(69,2)	(58,1)	(11,1)	19,1%
Cost for services (-)	(34,5)	(26,4)	(8,1)	30,7%
Personnel Costs (-)	(44,7)	(41,4)	(3,3)	8,0%
Other operating revenues/costs (+/-)	(5,4)	(2,7)	(2,7)	101,1%
Non recurring revenues/costs (+/-)	-	-	0,0	na
Portion of gain/(losses) from equity investments evaluated using the equity method	(0,6)	0,3	(0,9)	-303,0%
Capitalized R&D expenses	6,8	5,4	1,4	26,6%
Total operating costs	(147,6)	(123,0)	(24,6)	20,0%
% on Net Revenues	(85,1%)	(85,3%)
EBITDA	25,9	21,2	4,7	22,0%
% on Net Revenues	14,9%	14,7%
Depreciation, amortization (-)	(16,2)	(16,4)	0,2	-1,1%
EBIT	9,7	4,8	4,9	102,2%
% on Net Revenues	5,6%	3,3%
Net Financial Income/Expenses (+/-)	4,3	(1,6)	5,9	-367,9%
Taxes (-)	(4,8)	(1,2)	(3,6)	300,0%
Minorities	(0,0)	0,0	(0,0)
Group Net Income (Loss)	9,2	2,0	7,2	n/a
% on Net Revenues 4th November 2022	5,3%	1,3%

Summary 2022.9M Balance Sheet - Appendix B

Balance Sheet (€ mln)	2022.9M	2021
Inventory	102,4	81,3
Work in progress contracts	13,8	15,7
Accounts receivable	64,6	54,4
Accounts payable (-)	(68,9)	(56,0)
Op. working capital	111,9	95,4
Other current assets (liabilities)	(19,2)	(18,9)
Net working capital	92,7	76,5
Tangible assets	50,0	47,6
Right of use - IFRS 16/IAS 17	21,3	23,4
Intangible assets	29,3	23,9
Financial assets	5,5	8,1
Fixed assets	106,1	102,9
Net long term assets (liabilities)	16,2	14,2
Net invested capital	215,0	193,7
Cash & near cash items (-)	(36,4)	(50,2)
Short term financial assets (-)	(31,4)	(16,8)
Lease liability - IFRS 16/IAS 17	23,3	24,5
Short term borrowing	77,2	59,3
Medium-long term borrowing	93,2	104,2
Net financial position	125,8	121,0
Equity	89,2	72,6
Funds	215,0	193,7

Disclaimer

This presentation has been prepared by Tesmec S.p.A. ("Tesmec", the "Company" or the "Group"). As used herein, "Presentation" means this document, any oral presentation, the question and answer session and any written or oral material discussed or distributed during the presentation. The Presentation comprises written material/slides which provide information on the Company and its subsidiaries. The information contained in this Presentation has not been verified, approved or endorsed by or independently verified by any independent third party. Save where otherwise indicated, the Company is the source of the content of this Presentation. Care has been taken to ensure that the facts stated in this Presentation are accurate and that the opinions expressed are fair and reasonable. However, no representation or warranty, express or implied, is made or given by or on behalf of the Company, or the management or employees or advisors of the Company, or any other person as to the accuracy, completeness or fairness of the information or opinions contained in this document or any other material discussed at the Presentation. None of the Company nor any other person accepts any liability whatsoever for any loss howsoever arising from any use of this Presentation or its contents or otherwise arising in connection therewith.

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