Tesmec

Investor Presentation • May 10, 2022

Integrated Solutions Provider

2022.Q1 Results Presentation

• 1. Tesmec Group at a glance
• 1. Key Market trends & Corporate strategy
• 1. 2022.Q1 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 partner in a changing world	To operate in the market of infrastructure for the 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
• 10 May 2022 ▪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 as key strategic driver

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.

Sustainability as key strategic driver

PRIORITY TOPICS	TASKS (in progress or delivered)
Ethic and sustainable governance	▪ Gap analysis on the TCDF (Task Force on Climate-related Financial Disclosures) recommendations ▪ 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. Disclosure of the proportion of turnover, capital expenditures (capex) and operational expenditures (opex) that are eligible for the Taxonomy. ▪ Priority to green innovation and actions to meet the Technical screening criteria of the EU Taxonomy Regulation ▪ Trencher electrification path is being undertook.
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	▪ Focus on Ukrainian Emergency ▪ WHP (Workplace Health Promotion) certifications for 2 plants ▪ Charity initiatives for local communities and non-profit organizations ▪ Continuous training program for skills development and professional growth

Sustainability - Key Facts Q1 2022

KEY FACTS

• Focus on Ukrainian Emergency
• Continuation of solidarity path with dedicated actions and planning of corporate volunteering
• Promotion of employees welfare and wellbeing

Awareness and crowfunding campaigns inviting all employees to donate money or goods to Ukrainian refugees

Food Collection in all Tesmec italian branches: 570 kg of goods were distributed by Banco Alimentare to charity associations and indigent families

Priority to green and digital innovation: products range electrification, low emissions solutions, diagnostic for safe infrastructures

Launch of psychological counseling path with psychologists to manage stress-related disease on employees, improving performance

Trencher – Key Facts Q1 2022

FOCUS ON / KEY FACTS

• American Market Growth
• GreenPose successful impact on Fibre market in France
• MTR430 debut on French market
• New Technologies Development

American Market is experiencing a moment of considerable growth, especially in the fields of Fiber Optics, Powerlines and O&G.

TRT for GreenPose is imposing its value in France as the most sustainable, fast and convenient solution for Fibre Network construction

New Marais MTR430 is having an impact in the market; new digging attachments have been developed to widen the machine's application range

Drone, mobile warehouse, digital platforms and radars are confirming their potential and are opening a new market for the group

Energy Stringing - Key Facts Q1 2022

• Australian projects consolidation
• Critical situation on steel supply chain
• US & Middle East positive outlook

Challenging effort from Production Department to ship the first tranche of Australian orders

Exhibition IEEE 2022 in New Orleans confirms the market recovery in US

Negative impact on steel strands supply, critical rope production

Positive trend in Middle East Area for overhead and re-lining projects

Energy Automation - Key Facts Q1 2022

KEY FACTS

• Business consolidation in Italy and foreign countries
• Continuous investments in the Substation Automation segment
• Critical supply chain and significant postponement in delivery plans

Business growth in the italian market

Kick-off of new strategic projects to offer integrated solutions for the full monitoring of MV/LV secondary substations

Significant progress in the development of Substation Automation solutions

Strong challenges to guarantee reliable delivery plans and positive closing results due to lack of components

Rail - Key Facts Q1 2022

KEY FACTS

• Tesmec continues its GROWTH on the INTERNATIONAL railway MARKET: EGYPT is a new milestone
• EUROPEAN CERTIFICATION ACHIEVED – AMIS "Authorization for circulation": the catenary railway bogie is allowed to travel at 140 km/h without line interruption
• NEW GENERATION of DIAGNOSTIC VEHICLE with integrated systems & web platform to identify defects: INTEGRATED DESIGN

International Growth

This contract consolidates the international positioning of Tesmec Group in the catenary stringing field in Egypt.

• "Green Line" High Speed Rail • Project:
• Innovative "working train" made of n.6 rail vehicles to electrify a new double railway line of 660km • Solution:

Thanks to its unique technologies, Tesmec has the capability to satisfy client' needs in terms of job site efficiency, as timing and services.

Rail Certification – "Authorization for circulation"

The "AMIS" is the "European Certification" issued by ANSFISA – the National Agency for Railway Safety.

Completed the long certification process to allow also the catenary vehicle bogie configuration to travel as a passenger train on active line without line interruption.

This vehicle model OCPD001 is our flagship product on which we have already gained considerable experience worldwide.

The next step will be the extension to the diagnostic vehicle.

New generation of solution: OCPD002-e

The new diagnostic vehicle is a turning point thanks to the integrated design between vehicle & diagnostic systems.

PLUS:

• Integration of new diagnostic product lines
• Hybrid solution with hydrostatic traction system and electric version with batteries.
• Integrated diagnostic management with the monitoring of environmental and electrical parameters

Status:

▪ Homologation test and certification phase will be completed by year end.

2. 2022.Q1 Business highlights & Results

GROUP (€ mln)	Q1 2022	Q1 2021	Delta vs.21
REVENUES (1)	55 9 ,	49 0 ,	14 1% ,
EBITDA (2) (3)	8 3 ,	1 7 ,	16 5% ,
% Revenues on	14 8% ,	14 5% ,
(4) EBIT	2 9 ,	1 4 ,
% Revenues on	3% 5 ,	2 9% ,
Differences in (5) Exchange	0 8 ,	1 9 ,
% Revenues on	1 4% ,	3 8% ,
(LOSS) PROFIT BEFORE TAX	2 6 ,	2 0 ,
Revenues % on	4 6% ,	4 0% ,
INCOME/(LOSS) NET	2 0 ,	1 1 ,
% Revenues on	3 6% ,	2 2% ,
(€ mln) GROUP	2022 Q1	2021 Q1	Delta vs.21
IFRS NFP 16 ante	96 2 ,	95 5 ,	-0 8% ,
IFRS NFP 16 post	119 4 ,	117 7 ,	-1 4% ,

• (1) Revenues: Increase in sales & growth thanks to the Rail and Energy performance and the rebound of the Trencher sector in the US market
• (2) EBITDA: positive impact mainly by the Rail performance
• (3) EBITDA: improve thanks to rental/project/services activities with high margin and the contract inherent to the Rail Business
• (4) Impacted by 4service's fleet depreciation
• (5) The exchange differences are positive (USD & related currencies), but less compared to the 2021.Q1 and the closing of 2021.
• (6) Net interest: decrease from 1,4 € mln of 2021.Q1 to 1,2 € mln of 2022.Q1.
• (7) NFP increase due to the change in NWC, necessary to support the growth expected in the during the year and to face friction in the supplying and shipment activities related to the worldwide criticalities.

2022.Q1 Closing – Business Breakdown (€ mln)

Increase in sales compared to 2021.Q1 lead by the Energy industry trend

EBITDA: impacted by the utilities, raw material and freight costs increase, with higher effect on the Stringing segment. Started the process of reviewing the price related to the contract already signed

> The confirmed order backlog was Euro 98,5 million of which Euro 79,0 million from the Energy Automation

> Increase respect to 2021.Q1 also thanks to the rebound of the US market

EBITDA: impacted by the utilities, raw material and freight costs increase related to the worldwide criticalities.

> The confirmed order backlog was Euro 77,7 million

The revenues are related to the medium-long term contracts and are increased compared to 2021.Q1.

EBITDA: the increase compared to 2021.Q1 is related to a different products range with higher marginality and value added (i.e.: diagnostic). The price variation process related to the contract already signed is in an advanced stage

> The confirmed order backlog was Euro 113,4 million

2022.Q1 Revenues: sales spread over different geographical area

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.Q1 EBITDA

€ mln

2022.Q1 Financial Results

Financial Information (€ mln)	Q1 2022	2021
Net Working Capital	82 2 ,	76 5 ,
Current Non assets	79 7 ,	79 6 ,
of IFRS 16/IAS Right 17 use -	22 0 ,	23 4 ,
Other assets/liabilities Long Term	11 3 14 2 , ,
Capital Net Invested	195 2 ,	193 7 ,
Net Financial Indebtness	96 2 ,	96 6 ,
Lease liability IFRS 16/IAS 17 -	23 2 ,	24 5 ,
Equity	8 75 ,	72 6 ,

2021 Increase of the NWC mainly due to trade receivable 2022.Q1

2022.Q1 Working Capital evolution

sales concentrated at the end of the quarter and the stable level of the inventory

€ 60,8 mln

€ 76,5 mln

€ 82,2 mln

2022.Q1 Net Financial Position Evolution

²⁰²¹ Impacted by the increase of NWC to support the 2nd half, totally mitigated by operating cash generation 2022.Q1

2022 Net Financial Position Evolution

From 1 st January 2019, the new IFRS 16 has been introduced, the impact in term of NFP is around 23,2 M€, otherwise the NFP would have been around 96,2. Since April 2020 the NFP included the financial debt from the acquisition of 4service around 6,6 M€ (of which 7,6 M€ related to the IFRS 16) at 31 March 2022.

3. 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	Confirmed
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

• Big Market opportunities
• PNRR & other measures in Europe
• Stocks to guarantee business continuity
• Electrification

Recent developments all around the World are opening several business opportunities in the fields of Fibre, O&G, Water and Infrastructures

PNRR in Italy and others growth measures passed in Europe are favoring Trenchers & Surface Miners provision

Raw materials and semi-finished products shortage represent a tough challenge, Tesmec is coping with it thanks to flexibility, knowledge and stocks

Electrification path is being undertook. A first prototype of SCeP will be engineered to make urban works emissionless

Energy Stringing – Outlook 2022: Business Guidelines

OUTLOOK 2022

• Important re-lining & cable laying projects
• R&D focus on new methodologies & green solutions
• Supply Chain impact

Focus on re-lining & transmission projects in Middle East with important orders acquisition on Q1

Push on German corridors with special solutions dedicated to underground transmission lines

Development of a special light solution for reconductoring projects, enlargement of the zero emissions machines range for distribution.

Supply Chain disruption with a critical impact on delivery & warehouse management (push on standard solutions)

Energy Automation - Outlook 2022 : Business Guidelines

OUTLOOK 2022

• Consolidation of existing market
• Focus on market expansion with new business models
• New organization of service & after-sales activities
• Significant challenges related to supply chain and delivery plans during the year

Completion of product portfolio and promotion of innovative solutions to develop new market channels

Consolidation of exsisting market with accurate sales initiatives and partecipation to new and on-going tenders

Reinforcement of service activities to support business growth and generate new revenue streams

Growth strategy in the Substation Automation market to increase a business's market share

Rail - Outlook 2022: Business Guidelines

Internationalization of the Business:

• Participation to DOMESTIC & INTERNATIONAL TENDERS for an approx. value of € 150 mln
• Development of GREEN SOLUTIONS with ZERO ENVIRONMENTAL impacts: bimodal & full electric vehicles
• Diagnostic systems with ARTIFICIAL INTELLIGENCE for safety of the infrastructures

Management of actual orders paying special attention to prices definition according to costs increase

Guarantee a constant production flow through suppliers' management for raw material provision

Increase oders portfolio in H2 2022 for a growing future: participation to tenders for an approx value ~ € 120-150 mln

Company organization with an adaptive model, strategic asset to pursue business growth

Summary 2022.Q1 Profit & Loss statement - Appendix A

Profit & Loss Account (Euro mln)	2022 Q1	2021 Q1	Delta 2021 vs	Delta %
Net Revenues	55 9 ,	49 0 ,	6 9 ,	14 1% ,
(-) Raw materials costs	(23 8) ,	(21 5) ,	(2 3) ,	10 8% ,
Cost for (-) services	(9 7) ,	(6 8) ,	(2 9) ,	42 7% ,
Personnel Costs (-)	(14 7) ,	(13 3) ,	(1 4) ,	10 3% ,
Other operating revenues/costs (+/-)	(1 2) ,	(1 5) ,	0 3 ,	-20 3% ,
Non recurring revenues/costs (+/-)	-	-	0 0 ,	na
of gain/(losses) Portion from equity investments evaluated using the equity method	0 0 ,	(0 2) ,	0 3 ,	-106 3% ,
Capitalized R&D expenses	1 8 ,	1 5 ,	0 3 ,	20 8% ,
Total operating costs	(47 6) ,	(41 9) ,	(5 7) ,	13 7% ,
Net Revenues % on	(85%)	(86%)
EBITDA	8 3 ,	7 1 ,	1 2 ,	5% 16 ,
Net Revenues % on	15%	14%
Depreciation , amortization (-)	(5 4) ,	(5 7) ,	0 3 ,	-5 6% ,
EBIT	2 9 ,	1 4 ,	1 5 ,	106 7% ,
% Net Revenues on	5%	3%
Income/Expenses (+/-) Net Financial	(0 4) ,	0 6 ,	(1 0) ,	-166 3% ,
(-) Taxes	(0 5) ,	(0 9) ,	0 4 ,	-43 3% ,
Minorities	(0 0) ,	(0 0) ,	0 0 ,
(Loss) Group Net Income	2 0 ,	1 1 ,	0 9 ,	n/a
% Net Revenues on	3 6% ,	2 2% ,

Summary 2022.Q1 Balance Sheet - Appendix B

	Sheet (€ mln) Balance	Q1 2022	2021
	Inventory	82 7 ,	81 3 ,
	Work in contracts progress	13 2 ,	15 7 ,
	Accounts receivable	67 7 ,	54 4 ,
	Accounts payable (-)	(62 7) ,	(56 0) ,
	Op . working capital	100 9 ,	95 4 ,
	Other (liabilities) current assets	(18 7) ,	(18 9) ,
	Net working capital	82 2 ,	5 76 ,
	Tangible assets	46 9 ,	47 6 ,
	Right of - IFRS 16/IAS 17 use	22 0 ,	23 4 ,
	Intangible assets	24 3 ,	23 9 ,
	Financial assets	8 5 ,	8 1 ,
	Fixed assets	101 7 ,	102 9 ,
	(liabilities) Net long term assets	11 3 ,	14 2 ,
	Net invested capital	195 2 ,	193 7 ,
	Cash (-) & cash items near	(42 5) ,	(50 2) ,
	Short financial (-) term assets	(19 2) ,	(16 8) ,
	- IFRS 16/IAS Lease liability 17	23 2 ,	24 5 ,
	Short borrowing term	61 7 ,	59 3 ,
	Medium-long borrowing term	96 2 ,	104 2 ,
	Net financial position	119 4 ,	121 0 ,
	Equity	75 8 ,	72 6 ,
10 May 2022	Funds	195 2 ,	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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