Tesmec

Earnings Release • Oct 27, 2017

Integrated Solutions Provider

9M 2017 results

www.tesmec.com

Corporate Strategy >

• 9M 2017 Results >
• Outlook 4Q 2017 >

TESMEC SMART CITY

STRINGING

• Overhead power lines construction & maintenance >
• Reconductoring and line improvement >

• Underground cable laying >

• Railway lines electrification >

• Catenary maintenance and diagnostic >
• Special Applications >

FULLY INTEGRATED SOLUTIONS PROVIDER

• Telecommunication & Teleprotection >
• Electronic integrated sensors, fault detection and measurement >

• Protections & Electronics for Distribution >

• > Telecom networks, FTTH & long distance, power cable installation

• Oil & Gas, Water pipelines
• > Bulk excavation of rock and
• > Quarries

TESMEC

" From Steel to Technology "

OUR MISSION

• Our mission is to be value added integrated solutions provider in the market of infrastructure for the transport of energy, data and material >
• We provide efficiency, digitalization, safety and sustainability for the modernization of the infrastructures of every country in the world >
• We focus on winning integration of advanced technology & high know how to meet the new demands of the markets >

TIME

WE ARE THE ONLY PROVIDER IN THE WORLD able to satisfy the infrastructure market's needs through our fully integrated solutions suite

xxx WE HAVE THE CAPABILITY TO DO THIS!

• Corporate Strategy >
• 9M 2017 Results >
• Outlook 4Q 2017 >

GROUP (Euro mln)	9M 2017	9M 2016	Delta %
REVENUES	132,1	108,5	21,8%
EBITDA Adj (*)	15,3	10,7	42,7%
% on Revenues	11,5%	9,9%
EBITDA	13,6	10,7	27,0%
% on Revenues	10,3%	9,9%
EBIT	3,1	1,6	97,5%
% on Revenues	2,4%	1,0%
DIE	(4,6)	(0,3)	-1381,0%
Differences in Exchange
PROFIT (LOSS) BEFORE	(3,3)	(2,0)	-62,6%
TAX
% on Revenues	-2,5%	-1,9%
NET INCOME/(LOSS)	(1,8)	(1,4)	-31,8%
% on Revenues	-1,4%	-1,3%

GROUP (Euro mln)	9M 2017	2016
NFP	93,5	96,7

ENERGY	9M2017	9M2016	Delta %
Revenues	44,8	30,5	47,1%
EBITDA Adj (*)	8,1	2,9	174,8%
% on Revenues	17,9%	9,6%
EBITDA	7,3	2,9	149,6%
% on Revenues	16,3%	9,6%

TRENCHERS	9M2017	9M2016Delta %
Revenues	76,1	74,3	2,4%
EBITDA Adj (*)	5,4	7,5	-28,2%
% on Revenues	7,1%	10,1%
EBITDA	4,8	7,5	-35,7%
% on Revenues	6,3%	10,1%

RAILWAY	9M2017	9M2016	Delta %
Revenues	11,2	3,7	200,7%
EBITDA Adj (*)	1,8	0,3	569,3%
% on Revenues	16,0%	8,0%
EBITDA	1,5	0,3	434,7%
% on Revenues	13,1%	8,0%

(*) Without considering Euro 1,7 million on respect of the effects of last year's real estate transaction the EBITDA would have been Euro 15.3 million.

9M 2017 Improvements in Q3 compare to 1H year

Euro/mln	1H			Q3		9M - YTD
	2017	2016	Var.	2017	2017	2016	Var.
REVENUES	91,1	74,0	23,2%	41,0	132,1	108,5	21,8%
EBITDA Adj	9,8	7,4	31,6%	5,5	15,3	10,7	42,7%
EBITDA	8,7	7,4	18,3%	4,9	13,6	10,7	27,0%
EBITDA Adj %	10,6%	9,9%		13,4%	11,5%	9,9%
DIFFERENCES IN EXCHANGE	(3,1)	0,5	-592,7%	(1,5)	(4,6)	(0,3)	-1381,0%
NET INCOME/ (LOSS)	(1,8)	(1,3)	-37,3%	-	(1,8)	(1,4)	- 31,8%

9M 2017 Differences in Exchange

GROUP (Euro mln)	9M 2017	9M 2016	9M 2015
Differences in Exchange	(4,6)	(0,3)	1,4
of which:
Realised	0,1	0,0	0,5
Unrealised	(4,7)	(0,3)	0,9
End-of-period exchange rate USD/Eur as at 31 December	1,054	1,089	1,107
End-of-period exchange rate USD/Eur as at 30 September	1,181	1,116	1,115
Differences in Exchange for Value:
USD	(3,0)	(0,9)	1,4
ZAR	(0,6)	0,4	(0,4)
PLN	(0,6)	0,0	0,0
OTHER	(0,4)	0,2	0,4
Total	(4,6)	(0,3)	1,4

(*) Without considering Euro 1,7 million on respect of the effects of last year's real estate transaction the EBITDA would have been Euro 15.3 million.

Financial Information (Euro mln)	9M 2017	2016
Net Working Capital	68,6	76,0
Non Current assets	68,7	70,1
Other Long Term assets/liabilities	1,4	0,5
Net Invested Capital	138,7	146,6
Net Financial Indebtness	93,5	96,7
Equity	45,2	49,9
Total Sources of Financing	138,7	146,6

2016	Working capital drives improvement in net invested capital	9M 2017
27th October 2017			14

Working Capital evolution

OPERATING NET FINANCIAL POSITION

Energy Total BACKLOG Sales Q3.2017 12,8 41,0 3,4 Backlog 30/6 In take Q3 12,6 36,0 1,0 Backlog 30/9 19,7 177,0 107,1 24,8 22,4 50,2 19,8 182,0 109,5 52,7 Euro/mln

Latest key projects – ENERGY

STRINGING xxx

• A new concept for a safer and more efficient jobsite: Stringing solutions 4.0
• Strong sales activity on target market (EU, Germany, LATAM)

Solutions 4.0 for the first time on jobsite

xxx ENERGY AUTOMATION

• Partner agreements and technological collaborations with key players in the market
• Successful pilot installation of SMT in Russia
• Strategic solutions diversification with international key players:
• Smart Termination
• New protection A3 Panels

Latest key projects – TRENCHER

xxx ENERGY TRANSMISSION

Solar farm

KEY COOPERATIONS

Smart grid projects in France and worldwide

Pilot projects in Photovoltaic power stations

• Corporate Strategy >
• 9M 2017 Results >
• Outlook 4Q 2017 >

MILESTONES
	1 ENERGY: Closing of important projects already announced (Russia, Italy, South America)
	2 RAILWAY: Strong effect of the rail start-up (acquired orders in Italy and US)
xxx BUSINESS	3 TRENCHER: definitive launch of traditional products for infrastructure projects
	> Rock Hawg: Impact on long term non cyclical projects (civil projects, infrastructures and mines with new materials) > FTTH Smart: Projects start-up in different countries thanks to new technologies for mini-micro trenches
OUTLOOK 4Q
	Revenues: thanks to 4Q forecast better than 3Q, year end target expected to be 1 above Euro 180 mln
ECONOMICS & xxx FINANCIALS	2 EBITDA adj expected to be around 14%
	3 PFN confirmed improvement at the year end
	4 Expected BACKLOG 2017 higher than 3Q 2017

Summary 9M 2017 Profit & Loss statement - Appendix A

Profit & Loss Account (Euro mln)	9M 2017	9M 2016	Delta vs 2016	Delta %
Net Revenues	132,1	108,5	23,6	21,8%
Raw materials costs (-)	(58,7)	(46,3)	(12,4)	26,8%
Cost for services (-)	(22,9)	(22,6)	(0,3)	1,4%
Personnel Costs (-)	(33,4)	(29,2)	(4,2)	14,5%
Other operating revenues/costs (+/-)	(7,4)	(3,3)	(4,1)	124,4%
Portion of gain/(losses) from equity investments evaluated using the equity method	0,0	0,1	(0,1)	-144,7%
Capitalized R&D expenses	3,9	3,5	0,4	11,8%
Total operating costs	(118,5)	(97,8)	(20,7)	21,2%
% on Net Revenues	(90%)	(90%)
EBITDA	13,6	10,7	2,9	27,0%
% on Net Revenues	10%	10%
Depreciation, amortization (-)	(10,5)	(9,1)	(1,4)	14,8%
EBIT	3,1	1,6	1,5	97,5%
% on Net Revenues	2 %	1 %
Net Financial Income/Expenses (+/-)	(6,4)	(3,6)	(2,8)	-78,0%
Taxes (-)	1,5	0,6	0,9	128,9%
Minorities	-	-	-	-
Group Net Income (Loss)	(1,8)	(1,4)	(0,4)	-28,9%
% on Net Revenues	-1%	-1%

Balance Sheet (Euro mln)	9M 2017	2016
Inventory	65,3	70,5
Accounts receivable	52,4	49,4
Accounts payable (-)	(33,2)	(31,2)
Op. working capital	84,5	88,7
Other current assets (liabilities)	(15,9)	(12,7)
Net working capital	68,6	76,0
Tangible assets	46,8	47,3
Intangible assets	18,2	18,9
Financial assets	3,7	3,9
Fixed assets	68,7	70,1
Net long term liabilities	1,4	0,5
Net invested capital	138,7	146,6
Cash & near cash items (-)	(22,0)	(18,5)
Short term financial assets (-)	(11,4)	(9,1)
Short term borrow ing	79,4	70,1
Medium-long term borrow ing	47,5	54,2
Net financial position	93,5	96,7
Equity	45,2	49,9
Funds	138,7	146,6

Disclaimer

The Manager responsible for preparing the company's financial reports, Andrea Bramani, 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.

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