Alstom — Investor Presentation 2023

Nov 15, 2023

Half Year Results Fiscal Year 2023/24

15 November 2023

Disclaimer

• This presentation contains forward-looking statements which are based on current plans and forecasts of Alstom's management. Such forward-looking statements are relevant to the current scope of activity and are by their nature subject to a number of important risks and uncertainty factors (such as those described in the documents filed by Alstom with the French AMF) that could cause actual results to differ from the plans, objectives and expectations expressed in such forwardlooking statements. These such forward-looking statements speak only as of the date on which they are made, and Alstom undertakes no obligation to update or revise any of them, whether as a result of new information, future events or otherwise.
• This presentation does not constitute or form part of a prospectus or any offer or invitation for the sale or issue of, or any offer or inducement to purchase or subscribe for, or any solicitation of any offer to purchase or subscribe for any shares or other securities in the Company in France, the United Kingdom, the United States or any other jurisdiction. Any offer of the Company's securities may only be made in France pursuant to a prospectus having received the visa from the AMF or, outside France, pursuant to an offering document prepared for such purpose. The information does not constitute any form of commitment on the part of the Company or any other person. Neither the information nor any other written or oral information made available to any recipient or its advisers will form the basis of any contract or commitment whatsoever. In particular, in furnishing the information, the Company, the Banks, their affiliates, shareholders, and their respective directors, officers, advisers, employees or representatives undertake no obligation to provide the recipient with access to any additional information.

CEO introduction Henri Poupart-Lafarge, Chairman and CEO

H1 2023/24 financial results Bernard Delpit, CFO

Introduction

Henri Poupart-Lafarge Chairman and CEO

Consolidating Investment Grade profile, delivering profitability and cash trajectory

Commercial and operational action plan

• ✓ Orders selectivity
• ✓ Successful ramp-up
• ✓ On-time delivery restored by FY25
• ✓ Inventory days back to 75 mid-term

Costs efficiency

• ✓ ~1,500 S&A FTEs
• ✓ S&A / sales ratio targeting (~1pp)

Balance sheet strengthening

• ✓ Commitment to Investment Grade
• ✓ €2bn inorganic measures

Governance

• ✓ Organization simplification
• ✓ Cash driven short-term incentives

Operational and commercial plan to secure EBIT and cash trajectory

€(1.1)bn cash outflow Reinforcement of commercial and operational plan

• Low level of commercial activity orders down 16% vs H1 2022/23

• Delays in acceptance and finalization of Aventra

• Acceleration of third phase of merger roadmap (optimization)

• Working capital discipline (inventory days and contract assets reduction plan)
• Costs saving plan (~1,500 jobs mainly S&A)

Decision to reinforce Balance sheet to secure Investment grade

Governance changes to improve accountability at all levels

Financial Results

Bernard Delpit CFO

H1 2023/24 financial results in line with preliminary figures release

Book-to-bill at 1 for the first half

10.1 8.4 H1 2022/23 H1 2023/24 (16.1)% ORDERS H1 2023/24 (in €bn)

● Book-to-bill 1.0, backlog at €90bn

● Margin and cash on order intake supporting mid-term trajectory

Acceleration of ramp-up during Q2 with organic sales growth at 8.8%

SALES H1 2023/24 (in €m)

H1 2023/24 SALES SPLIT BY PRODUCT LINES

ROLLING STOCK: €4,463m (+2% vs H1 2022/23, o/w 6% organic growth) Ramp-up in the US and Brazil and solid level of execution in the EU, Kazakhstan and India

SERVICES: €1,986m (+10% vs H1 2022/23 , o/w 14% organic growth) Strong ramp-up in the UK, Italy and US

SIGNALLING: €1,243m

(+8% vs H1 2022/23 , o/w 12% organic growth) Consistent execution across all regions mainly in the EU and APAC

SYSTEMS: €751m

(+2% vs H1 2022/23 , o/w 5% organic growth) Good performance of Turnkey Systems projects in Mexico and Canada

aEBIT in line with preliminary release

(in € million)	H1 2022/23	H1 2023/24	Evolution
Sales	8,048	8,443	+4.9%
Cost of Sales	(6,988)	(7,278)	+4.1%
Adjusted Gross Margin before PPA¹ As a % of sales	1,060 13.2%	1,165 13.8%	+60bps
Research and development expenses before PPA2 As a % of sales	(231) 2.9%	(254) 3.0%	+10.0%
Selling & Administrative expenses As a % of sales	(507) 6.3%	(538) 6.4%	+6.1%
Net interest in equity investees pickup3	75	65	(13.3)%
Adjusted EBIT ¹	397	438	+10.3%
Adjusted EBIT margin¹	4.9%	5.2%	+30bps

1. Definition in Appendix

2. Excluding €(30) million of amortisation expenses of the purchase price allocation of Bombardier Transportation.

3. Definition in Appendix. This mainly includes Chinese joint-ventures

Profit improvement impeded by Aventra

aEBIT (in %)

aEBIT to Net Income bridge

(in € million)	H1 2022/23	H1 2023/24	Evolution
Sales	8,048	8,443	+4.9%
Adjusted EBIT	397	438	+10.3%
Adjusted EBIT margin	4.9%	5.2%	+30bps
Restructuring and rationalisation costs	(6)	(7)	+16.7%
Integration, acquisition and other costs	(116)	(91)	(21.6)%	o/w Integration costs €65m
Reversal of net interest in equity investees pickup¹	(75)	(65)	(13.3)%
EBIT before PPA and impairment	200	275	+37.5%	FX / hedge and fees + €21m
Financial results	(24)	(98)	x4.1	Interest rates paid + €53m
Tax results	(48)	(44)	(8.3)%	ETR 25%
Share in net income of equity investees	62	53	(14.5)%	Chinese JVs stable except FX
Minority interests from continued op.	(11)	(12)	+9.1%
Net profit2 Adjusted	179	174	(2.8)%
PPA net of tax	(195)	(173)	(11.3)%
Net Profit - Continued operations, Group share	(16)	1	-

1 This mainly includes Chinese joint-ventures

2 Definition in appendix

FCF: heavy impact of Working capital changes, whereas FFO increases

From EBIT* to Free Cash Flow (in € million)

* EBIT Before PPA and impairment

(1) Change in Working Capital (Trade + Contract working capital change) for €(1,375)m corresponds to the €(1,392) million changes in working capital resulting from operating activities disclosed in the condensed interim consolidated financial statements from which the €(15) million variations of restructuring provisions and €(1) million of variation of Tax working capital have been excluded. .

Working Capital evolution

(in € million)	31 March 2023	30 September 2023	Variation
Inventories	3,729	4,216	487
Trade payables	(3,640)	(4,223)	(583)	Trade working capital (from 3 to 20 days of sales)
Trade receivables	2,670	3,019	349	Strong effect of ramp-up acceleration in Q2 (inventories, ● receivables and payables) notably in France and
Other assets/ liabilities	(2,617)	(2,107)	510	Americas
Trade Working Capital	142	905	+763	Reversal of VAT change in rules in France ●
Contract assets	4,533	5,369	836	Contract Working capital (from (89) to (72) days of sales)
Contracts liabilities	(6,781)	(6,958)	(177)	Contract assets increase due to Aventra delayed ● acceptances and production ramp-up
Current provisions Of which Risks on contracts	(1,779) (1,182)	(1,750) (1,141)	+29 +41	Contract liabilities driven by downpayments ● Provisions consumption as per plan ●
Contract Working Capital	(4,027)	(3,339)	+688
Total Working Capital	(3,885)	(2,434)	+1,451(1)

(1) As per note 15, Total changes in working capital for €1,451m include €1,392m changes in working capital resulting from operating activities and €59m Others non-cash, mainly forex.

Net debt evolution (in € million)

Net debt target (in € million)

Company Action Plan

Henri Poupart-Lafarge Chairman and CEO

Strong backlog with confirmed GM% improvement trajectory

Backlog Stratification – Gross Margin evolution

Mid-term market potential >€230bn over next three years, enabling selectivity

Ramp-up acceleration and long lead times is generating inventories

Manufacturing Output

Delivery KPIs still require improvements to reach pre-acquisition level

Quality well on-track, Delivery performance key focus

Snapshot on Amtrak and Aventra programs

AMTRAK Next Generation US - High Speed Train

Key numbers / Achievements

• Selling Price €1.5 billion, positive GM 28 trains
• 8 trains built
• Acceptance 0%

Challenges

• Delay due to lack of experience of authorization for this type of trains in the US
• Disagreement on homologation requirements
• Extension of time discussion (EoT)

Forecast start of revenue service Summer 2024

AVENTRA Platform UK - Regional Trains 6 contracts – 5 customers

Key numbers / Achievements

• Total Selling Price ~€5 billion, negative GM 443 trains
• Production 94%
• Payment 87% Acceptance 75%

Challenges

• Penalties / claims negotiations
• Reliability growth
• Customers landscape: drivers unions, storage capacity…

Expecting finalization during first half of FY 2024/25

New cost efficiency measures to secure our medium-term profitability trajectory

Selling & administrative expenses ( as a % of sales)

• Headcount reduction of ~1,500 FTEs, mainly S&A, out of ~82,000 FTEs as of September 2023.
• Around 1pp S&A / Sales ratio reduction targeted to support Alstom's mid-term aEBIT trajectory
• Associated restructuring costs and payback to be implemented in next three-year plan

New measures towards improving trade working capital efficiency

Trade Working Capital (in days of sales)

● Inventories: targeting reduction from 91 days as of H1 to ~80 days by March 2024, with mid-term target at 75 days

Contract Working Capital (in days of sales)

• Improve Operational KPIs to accelerate acceptance cycle
• Renegotiation of some contracts cash curves

Consolidating Investment Grade profile, delivering profitability and cash trajectory

Commercial and operational action plan

• ✓ Orders selectivity
• ✓ Successful ramp-up
• ✓ On-time delivery restored by FY25
• ✓ Inventory days back to 75 mid-term

Costs efficiency

✓ ~1,500 S&A FTEs ✓ S&A / sales ratio targeting (~1pp)

Balance sheet strengthening

• ✓ Commitment to Investment Grade
• ✓ €2bn inorganic measures

Governance

• ✓ Organization streamlining
• ✓ Cash driven short-term incentives

Mid-term targets confirmed

FY 2023/24 outlook and mid-term targets confirmed

• Book to bill above 1
• Sales organic growth: above 5%
• aEBIT around 6%
• FCF within the range €(500m) €(750)m

The Group has based its FY 2023/24 outlook on a central inflation scenario reflecting a consensus of public institutions.

The Group also assumes its continuous ability to navigate the supply chain, macro-economic and geopolitical challenges as it has done during this first half of FY 2023/24.

Mid-term targets To be reached in FY 2025/26

• Book to bill above 1
• CAGR¹ on Sales above 5%
• aEBIT 8 -10%

• FCF > 80% conversion²

• From FY 2025/26 onwards. Subject to short term volatility

^1. CAGR between Sales proforma FY 2020/21 and FY 2025/26

Contacts & Agenda

Martin VAUJOUR VP Investor Relations

Estelle MATURELL ANDINO Deputy Head Investor Relations

investor.relations@alstomgroup.com

24 January 2024 Third quarter FY 2023/24 orders and sales

15 May 2024 FY 2023/24 results

Financial Calendar

		London, UK
		Paris, France
20 November	HY 23/24 roadshow in Frankfurt – Jefferies	Frankfurt, GERMANY
21 November	HY 23/24 roadshow in Zurich – Jefferies	Zurich, SWITZERLAND
22 November	Asia roadshows (South-East Asia &Australia) – HSBC	Virtual
23 – 24 November	Asia roadshows (Japan & Middle-East) – Mizuho	Virtual
27 November	HY 23/24 roadshow in New-York – ODDO	New York, USA
28 November	HY 23/24 roadshow in Chicago – ODDO	Chicago, USA
29 November	HY 23/24 roadshow in Toronto – Redburn	Toronto, CANADA
29 November	Redburn CEO conference – Redburn	Virtual
29 November	Forum CIC Market Solutions – CIC	Paris, France
30 November	HY 23/24 roadshow in Los Angeles – Redburn	Los Angeles, USA
30 November	The Premium Review conference - Société Générale	Paris, France
1 December	HY 23/24 roadshow in San Francisco – Redburn	San Franciso, USA
1 December	HY 23/24 Fireside Chat with CEO and CFO - CITI	Virtual
4 December	14th European Industrials conference – Goldman Sachs	London, UK
6 December	Asia roadshow (Japan) – Mizuho	Virtual
	16 November 17 November	HY 23/24 roadshow in London – Bank of America HY 23/24 roadshow in Paris – Kepler Cheuvreux

HY 2023/24 backlog per regions and product lines

Backlog breakdown per regions (in € million)

Backlog breakdown per product line (in € million)

HY 2023/24 Sales per regions and product lines

Sales breakdown per regions (in € million)

Sales breakdown per product line (in € million)

Sales by currency

Currencies	H1 2023/24 as a % of sales
EUR	46.3%
USD	12.5%
GBP	11.5%
INR	5.0%
AUD	4.8%
CAD	3.0%
SEK	2.7%
ZAR	2.6%
MXN	2.2%
KZT	1.2%
BRL	1.2%
Currencies below 1% of sales	7.1%

Equity in € million

Bridge consideration – From Entreprise Value to Equity Value

(in € million)	H1 2023/24
Total Gross debt, incl. lease obligations (1)	4,897
Pensions liabilities net of prepaid and deferred tax asset related to pensions (2)	632
Non controlling interest (3)	104
Cash and cash equivalents (4)	(826)
Other current financial assets (4)	(59)
Other non-current financial assets (5)	(55)
Net deferred tax liability / (asset) (6)	(493)
Investments in associates & JVs, excluding Chinese JVs (7)	(110)
Non-consolidated Investments (8)	(75)
Bridge	4,015

(1) Long-term and short-term debt and Leases (Note 20), excluding the lease to a London metro operator for €109m due to matching financial asset (Notes 14 and 20)

(2) As per Note 22 net of €(25)m of deferred tax allocated to accruals for employees benefit costs

(3) As per balance sheet

(4) As per balance sheet

(5) Other non-current assets: Loans to Non-consolidated Investments for €27m and deposit on a US loan for €28m (Notes 14 and 20)

(6) Deferred Tax asset and Liabilities - as per balance sheet net of €(25)m of deferred tax allocated to accruals for employees benefit costs

(7) JVs - to the extent they are not included in equity pickup / FCF, ie excluding Chinese JVs.

(8) Non-consolidated investments as per balance sheet

Bombardier Transportation PPA provisional amortisation plan

(in € million)	As per P&L 1 Booking
FY 2020/21	(71)
FY 2021/22	(428)
FY 2022/23	(436)
FY 2023/24	(368)
FY 2024/25	(373)
FY 2025/26	(264)
FY 2026/27	(213)
FY 2027/28	(203)
FY 2028/29	(166)
FY 2029/30	(138)
FY 2030/31	(107)
FY 2031/32	(96)
FY 2032/33	(95)
FY 2033/34	(46)
Beyond	(143)

● The Gross PPA amortisation plan will be subject to FX evolution in future years or subject to potential impairments

1. Excludes PPA other than related to the purchase of Bombardier Transportation

Reconciliation between consolidated income statement and the MD&A management view as of 30 September 2023

(in € million)	Tota l		Adjustments		Tota l
	Con s olida ted Fin a n cia l Sta tem en ts (GAAP)	(1)	(2)	(3)	Con s olida ted Fin a n cia l Sta tem en ts (MD&A view)
30 Septemb er 2023
Sales	8,443				8,443
Cost of Sales	(7,432)	154			(7,278)
airment (*) Adjusted Gross Margin b efore PPA & imp	1,011	154	-	-	1,165
R&D expenses	(284)	30			(254)
Selling expenses	(180)	-			(180)
Administrative expenses	(358)	-			(358)
Equity pick-up	-			6 5	6 5
Adjusted EBIT (*)	189	184	-	6 5	438
Other income / (expenses)	(98)				(98)
Equity pick-up (reversal)	-	-	-	(65)	(65)
airment (*) EBIT / EBIT b efore PPA & imp	9 1	184	-	-	275
Financial income (expenses)	(98)				(98)
Pre-tax income	(7)	184	-	-	177
Income tax Charge	(28)	(16)	-		(44)
Share in net income of equity-accounted investments	4 8	5			5 3
Net profit (loss) from continued operations	1 3	173	-	-	186
Net profit (loss) attributable to non controlling interests (-)	(12)				(12)
Net profit (loss) from continued operations (Group share) / Adjusted Net Profit (loss) (*)	1	173	-	-	174
Purchase Price Allocation (PPA) & impairment net of corresponding tax effect	-	(173)			(173)
Net profit (loss) from discontinued operations	-				-
Net profit (Group share)	1	-	-	-	1

Adjustments as of 30 September 2023:

• 1. Impact of business combinations: amortisation of assets exclusively valued when determining the purchase price allocation (PPA), including net income of equity accounted investments, and including corresponding tax effect;
• 1. Impact of business combinations: impairment of assets exclusively valued when determining the purchase price allocation (PPA) (see Note 3.6 of the financial statements), including corresponding tax effect – no impact this semester;
• 1. Reclassification of share in net income of the equityaccounted investments when these are considered to be part of operating activities of the Group

Reconciliation between consolidated income statement and the MD&A management view as of 30 September 2022

(in € million)	Tota l	Adjustments				Tota l
	Con s olida ted Fin a n cia l					Con s olida ted Fin a n cia l
	Sta tem en ts	(1)	(2)	(3)	(4)	Sta tem en ts
	(GAAP)					(MD&A view)
30 Septemb er 2022
Sales	8,048					8,048
Cost of Sales	(7,168)	178		2		(6,988)
(*) Adjusted Gross Margin efore PPA & imp airment b	880	178	-	2	-	1,060
R&D expenses	(261)	30				(231)
Selling expenses	(178)	-				(178)
Administrative expenses	(329)	-				(329)
Equity pick-up	-				7 5	7 5
EBIT (*) Adjusted	112	208	-	2	7 5	397
income (expenses) Other /	(120)			(2)		(122)
Equity pick-up (reversal)	-	-	-	-	(75)	(75)
(*) EBIT b efore PPA & imp airment EBIT /	(8)	208	-	-	-	200
Financial income (expenses)	(24)					(24)
Pre-tax income	(32)	208	-	-	-	176
Income tax Charge	(29)	(19)				(48)
in net income of equity-accounted investments Share	5 6	6				6 2
Net profit (loss) from continued operations	(5)	195	-	-	-	190
(loss) (-) Net profit attributable to non controlling interests	(11)					(11)
(*) (loss) (Group share) (loss) Net profit from continued operations / Adjusted Net Profit	(16)	195	-	-	-	179
Purchase Price Allocation (PPA) & impairment net of corresponding tax effect	-	(195)				(195)
(loss) Net profit from discontinued operations	(5)					(5)
Net profit (Group share)	(21)	-	-	-	-	(21)

Adjustments as of 30 September 2022:

• 1. Impact of business combinations: amortisation & impairment of assets exclusively valued when determining the purchase price allocation (PPA), including net income of equity accounted investments, and including corresponding tax effect;
• 1. Impact of Aptis closure: reclassification of operational results as non-recurring items following Alstom's announced and planned discontinuance of Aptis activities;
• 1. Reclassification of other operational costs to nonrecurring items – none for the fiscal year 2021/22;
• 1. Reclassification of share in net income of the equityaccounted investments when these are considered to be part of operating activities of the Group

Appendix - Non-GAAP financial indicators definitions (1/3)

This section presents financial indicators used by the Group that are not defined by accounting standard setters.

• Orders received

A new order is recognised as an order received only when the contract creates enforceable obligations between the Group and its customer. When this condition is met, the order is recognised at the contract value. If the contract is denominated in a currency other than the functional currency of the reporting unit, the Group requires the immediate elimination of currency exposure using forward currency sales. Orders are then measured using the spot rate at inception of hedging instruments.

• Book-to-Bill

The book-to-bill ratio is the ratio of orders received to the amount of sales traded for a specific period.

• Adjusted Gross Margin before PPA

Adjusted Gross Margin before PPA is a Key Performance Indicator to present the level of recurring operational performance. It represents the sales minus the cost of sales, adjusted to exclude the impact of amortisation of assets exclusively valued when determining the purchase price allocations ("PPA") in the context of business combination as well as non-recurring "one off" items that are not supposed to occur again in following years and are significant.

• Adjusted EBIT

Adjusted EBIT ("aEBIT") is the Key Performance Indicator to present the level of recurring operational performance. This indicator is also aligned with market practice and comparable to direct competitors.

Starting September 2019, Alstom has opted for the inclusion of the share in net income of the equity-accounted investments into the aEBIT when these are considered to be part of the operating activities of the Group (because there are significant operational flows and/or common project execution with these entities). This mainly includes Chinese joint-ventures, namely CASCO, Alstom Sifang (Qingdao) Transportation Ltd, Jiangsu ALSTOM NUG Propulsion System Co. Ltd. (former Bombardier NUG Propulsion) and Changchun Changke Alstom Railway Vehicles Company Ltd.

aEBIT corresponds to Earning Before Interests and Tax adjusted for the following elements:

• net restructuring expenses (including rationalisation costs);
• tangibles and intangibles impairment;
• capital gains or loss/revaluation on investments disposals or controls changes of an entity;
• any other non-recurring items, such as some costs incurred to realise business combinations and amortisation of an asset exclusively valued in the context of business combination, as well as litigation costs that have arisen outside the ordinary course of business;
• and including the share in net income of the operational equity-accounted investments.

A non-recurring item is a "one-off" exceptional item that is not supposed to occur again in following years and that is significant.

Adjusted EBIT margin corresponds to Adjusted EBIT expressed as a percentage of sales.

Appendix - Non-GAAP financial indicators definitions (2/3)

● EBIT before PPA

Following the Bombardier Transportation acquisition and with effect from the fiscal year 2021/22 condensed consolidated financial statements, Alstom decided to introduce the "EBIT before PPA" indicator aimed at restating its Earnings Before Interest and Taxes ("EBIT") to exclude the impact of amortisation of assets exclusively valued when determining the purchase price allocations ("PPA") in the context of business combination. This indicator is also aligned with market practice.

● Adjusted net profit

The "Adjusted Net Profit" indicator aims at restating the Alstom's net profit from continued operations (Group share) to exclude the impact of amortisation & impairment of assets exclusively valued when determining the purchase price allocations ("PPA") in the context of business combination, net of the corresponding tax effect.

● Free cash flow

Free Cash Flow is defined as net cash provided by operating activities less capital expenditures including capitalised development costs, net of proceeds from disposals of tangible and intangible assets. Free Cash Flow does not include any proceeds from disposals of activity.

The most directly comparable financial measure to Free Cash Flow calculated and presented in accordance with IFRS is net cash provided by operating activities.

● Net cash/(debt)

The net cash/(debt) is defined as cash and cash equivalents, marketable securities and other current financial asset, less borrowings

● Organic basis

This presentation includes performance indicators presented on an actual basis and on an organic basis. Figures given on an organic basis eliminate the impact of changes in scope of consolidation and changes resulting from the translation of the accounts into Euro following the variation of foreign currencies against the Euro.

The Group uses figures prepared on an organic basis both for internal analysis and for external communication, as it believes they provide means to analyse and explain variations from one period to another. However, these figures are not measurements of performance under IFRS.

Appendix - Non-GAAP financial indicators definitions (3/3)

● Gross margin % on backlog

Gross Margin % on backlog is a Key Performance Indicator to present the expected performance level of firmed contracts in Backlog. It represents the difference between the sales not yet recognized and the cost of sales not yet incurred from the contracts in Backlog. This % is an average of the portfolio of contracts in backlog and is meaningful to project mid and long term profitability.

● EBITDA + JV dividends

EBITDA + JV dividends is the EBIT before PPA, before the depreciation and amortisation, with the addition of the dividends received from the JVs.

● Funds from Operations

Funds from Operations "FFO" in the EBIT to FCF statement refers to the Free Cash Flow generated by Operations, less Working Capital variations.

● Trade Working Capital and Contract Working Capital

Trade Working Capital is the Working Capital that is not strictly contractual, hence not included in Project Working Capital. It includes:

• Inventories
• Trade Receivables
• Trade Payables
• Other elements of Working Capital, defined as the sum of Other Current Assets/Liabilities and Non-Current provisions

Contract Working Capital is the sum of:

• Contract Assets & Liabilities, which includes the Customer Down-Payments
• Current provisions, which includes Risks on contracts and Warranties