Investor Presentation • Apr 14, 2020
Investor Presentation
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Integrated Solutions Provider
www.tesmec.com
TESMEC Group strategic market segments
Further focus on development guidelines:
Focus on key geographic areas: USA, China and New developed Countries
Infrastructures and mining
Wide rental fleet
Diagnostic vehicles with integrated diagnostic systems for unmanned diagnostic and data management platform
Strategic Overview >
| st 1 PHASE xxx Health emergency |
Different impacts on the several businesses and key countries of the Group Stop of the production activities in Europe No impacts in the Tesmec markets/sector but delays due to the production and logistic lock down |
|---|---|
| nd 2 PHASE xxx Reopening |
Essential services granted in smart working modality Reopening of production activities The gears of the reopening will be impacted by the Government Rules. |
| rd 3 PHASE xxx Recovery & growth |
Recovery and growth thanks to new business opportunities and relevance of Tesmec key drivers: safety, connectivity and sustainability |
| Summary Management xxx Actions |
▪ Efficiency and flexibility actions adopted ▪ Actions to maintain employment levels ▪ Investments in key infrastructure sectors |
| MARKET TRENDS xxx |
▪ The rental business has a major in the global market. It is growing and expanding in market than ever before ▪ Customers want to increase the flexibility with limited investments in CAPEX |
|---|---|
| BENEFIT FOR THE xxx CUSTOMERS |
▪ Get the maximum operational advantage by having, when and where needed, the most suitable equipment available for the type of work to be performed ▪ Significant savings on time and costs of execution with the possibility to test the machines before deciding whether to buy |
| TESMEC TO BE | ▪ Integration of the 4SERVICE with the Tesmec USA's rental business to improve efficiency and profitability ▪ Keeping the Wet Rental/Full services business in Marais ▪ Strategic Key Area: USA, EU and Australia/New Zealand |
| BUSINESS DRIVERS |
▪ Cash-in business ▪ Recurring business ▪ Increase business volumes and market shares thanks to a stronger and more complete offer and wider range of solutions ▪ Building long-term relationships |
| 4Service S.r.l. | 19 trenchers owned + 8 trencher in leasing + 2 trenchers managed |
|---|---|
| MTS4Service LLC | 13 trenchers owned |
| Tesmec USA – Fleet |
16 trenchers owned |
| 58 trenchers |
TESMEC Rental is built up to face emerging market trend and internal needs. On one side, the market is changing and rental services might be elaborated to achieve the maximum operative advantage, allowing companies to increase the flexibility of financial resources and to reduce the financial fixed assets. On the other side, the Group might have the opportunity to increase sales, thanks to a wider fleet; and to build clients long-term relationship, thanks to customized rental contracts
| Tesmec Group FY2019 |
Tesmec Group Aggregated FY2019 |
|
|---|---|---|
| Sales | 200.7 | 198.6 |
| EBITDA | 27.4 | 31.4 |
| EBITDA % | 13.7% | 15.8% |
| NFP | 118.0 | 120.4 |
| NFP/EBITDA | 4.3x | 3.8x |
| NET EQUITY | 46.2 | 51.5 |
| FCF | (24.9) | (23.1) |
| ST Fin Assets | (9.9) | (9.9) |
| Cash | (17.9) | (20.0) |
| Other LT Debt | 145.9 | 150.3 |
| NFP | 118.0 | 120.4 |
| Shareholder Loan | 10.5 * | |
| * The shareholder loan was 7.8 M€ end of March. |
Key financials post transaction:
✓ Improvement of NFP/EBITDA of 0.5x
➢ The consolidation runner derives from the aggregation of 4Service S.r.l. (sale and rental business) and Tesmec Group, taking into consideration intercompany elisions
The pro forma consolidated NFP should not take into account the shareholder loan that lies in 4Service Srl, as it is an outstanding debt towards shareholders, subordinated to the bank debt, as such it is represented separately. The EBITDA represented in the table below doesn't include the transaction costs.
Sale and rental financials are represented - €4.4m Other LT for 4Service S.r.l. is the IFRS 16 effect of the trenchers in leasing
| Revenues 2019: ▪ 4Service S.r.l. + MTS4Service LLC |
6.4 M€ |
|---|---|
| ▪ Tesmec USA – Fleet |
3.0 M€ |
| Revenues 2020.Q1: |
|
| ▪ 4Service S.r.l. + MTS4Service LLC |
1.7 M€ |
| ▪ Tesmec USA – Fleet |
0.8 M€ |
| 4Service S.r.l. (only Rental) |
FY2019 | Mar-2020 | The consolidation runner derives from the ➢ |
|---|---|---|---|
| Sales EBITDA EBITDA % NFP NFP/EBITDA NET EQUITY |
6.9 5.2 75.2% 12.8 2.5x 8.7 |
11.7 | aggregation of MTS4Service LLC and 4Service S.r.l. (carve out of MTS S.p.A.) taking into consideration 3 impacts: IFRS16, intercompany elisions and the restatement of certain line items |
| FCF | 1.8 | ||
| Shareholder Loan | 10.5 | 7.8 | Other LT Debt is relative to the trenchers ➢ |
| Cash | (2.1) | (0.3) | in leasing (according to IFRS 16 standards) |
| Other LT Debt | 4.4 | 4.2 | |
| NFP | 12.8 | 11.7 | |
| Market Price | €m | €m | # | |
|---|---|---|---|---|
| Valuation check | Dec-19 | Mar-20 | trenchers | |
| 4Service S.r.l. - Market Price |
7.8 | 6.9 | 19 | |
| Leasing 4Service S.r.l. - Market Price |
5.8 | 5.8 | 8 | |
| MTS4Service LLC - Market Price |
10.4 | 9.3 | 13 | |
| Total fleet market price | 23.9 | 22.0 | 40 | |
| NFP | 12.8 | 11.7 | ||
| NWC | 0.0 | 1.3 | ||
| Equity Value market price valuation |
11.1 | 11.6 | 40 |
| Trading and transaction valuation |
Advantages | |
|---|---|---|
| EV/EBITDA | ≈4.1 | |
| EBITDA19 | 5.2 | 1) Value is ≈4.1 EBITDA |
| EV | 21.1 | 2) Value is lower than market price value |
| NFP Mar20 | 11.7 | 3) No cash out for the transaction |
| Equity Value - Price |
9.4 |
| Market Price - Valuation check |
|
|---|---|
| €m Mar-2020 |
|
| 4Service S.r.l. - Market Price |
6.9 |
| Leasing 4Service S.r.l. - Market Price |
5.8 |
| MTS4Service LLC - Market Price |
9.3 |
| Total fleet market price | 22.0 |
| NFP | 11.7 |
| NWC | 1.3 |
| Equity Value - market price valuation |
11.6 |
➢ The fleet at market price has a value of €22m, leading to an asset based equity value of €11.6m
The Tesmec Board of Directors approved a proposal which will be submitted to the Shareholders Meeting for the increase of share capital up to 50 M€
| Guidelines of the Business Plan will be released in June 2020 |
|
|---|---|
| 1Q and 2Q will be affected by the spread of COVID-19 worldwide with a Turnover |
|
| reduction of 20%-25% compared last year |
|
| xxx | 3Q and 4Q will recover |
| 2020 | The yearend turnover will be less than 2019, due to the 2 months of substantial lockdown |
| The EBITDA margin should improve in percentage thanks to the rental activity. |
|
| The Share Capital increase and cash generation will materially improve the ratio between |
|
| the net financial debt and EBITDA |
|
| TESMEC is focused in strategic market segments: | |
| FOCUS ON | ▪ SMART GRIDS & ENERGY TRANSITION |
| xxx STRATEGIC |
▪ 5G AND TELECOM |
| MARKETS | ▪ INFRASTRUCTURES & RAILWAYS |
| that will drive the Group in the 3rd phase of growth (slide 9) |
|
| ▪ ENERGY: increasing needs of "smart and digital" systems, focus on energy transition |
|
| and carbon free solutions | |
| DEVELOPMENT xxx |
▪ RAIL: push on maintenance and diagnostic of the railway network, new green |
| DRIVERS | motorization and high safety standard |
| ▪ TRENCHERS: investment plan for modern infrastructures, global demand of |
|
| connectivity that requires underground fiber optic networks | |
| ▪ Rationalization of costs structure and improvement of margins |
|
| ACTION PLAN |
▪ Take advantage of the liquidity measures taken by the governments against COVID-19 |
| xxx | ▪ Reinforcement of the management structure in strategic positions to face the new |
| challenges | |
The Manager responsible for preparing the company's financial reports, Marco Paredi, declares, pursuant to paragraph 2 of Article 154-bis of the Consolidated Law on Finance, that the accounting information contained in this presentation corresponds to the document results, books and accounting records.
Certain information included in this document is forward looking and is subject to important risks and uncertainties that could cause actual results to differ materially.
Any estimates or forward-looking statements contained in this document are referred to the current date and, therefore, any of the assumptions underlying this document or any of the circumstances or data mentioned in this document may change. Tesmec S.p.A. expressly disclaims and does not assume any liability in connection with any inaccuracies in any of these estimates or forward-looking statements or in connection with any use by any third party of such estimates or forwardlooking statements.
This document does not represent investment advice or a recommendation for the purchase or sale of financial products and/or of any kind of financial services. Finally, this document does not represent an investment solicitation in Italy, pursuant to Section 1, letter (t) of Legislative Decree no. 58 of February 24, 1998, or in any other country or state.
In addition to the standard financial reporting formats and indicators required under IFRS, this document contains a number of reclassified tables and alternative performance indicators. The purpose is to help users better evaluate the Group's economic and financial performance. However, these tables and indicators should not be treated as a substitute for the standard ones required by IFRS.
www.tesmec.com
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