NRC Group — Investor Presentation 2020

May 20, 2020

Q1 2020 Earnings Presentation

CEO – Henning Olsen and CFO – Dag Fladby

Disclaimer

• This draft presentation (hereinafter referred to as the "Presentation") has been prepared exclusively for information purposes and does not constitute an offer to sell or the solicitation of an offer to buy any financial instruments.
• This Presentation includes and is based on, among other things, forward-looking information and statements. Such forward-looking information and statements are based on current expectations, estimates and projections. Such forward-looking information and statements reflect current views with respect to future events and are subject to risks, uncertainties and assumptions. We cannot give any assurance as to the correctness of such information and statements.
• Several factors could cause the actual results, performance or achievements of the companies mentioned herein to be materially different from any future results, performance or achievements that may be expressed or implied by statements and information in this Presentation, including, among others, risks or uncertainties associated with the company's business, segment, development, growth management, financing, market acceptance and relations with customers, and, more generally, general economic and business conditions, changes in domestic and foreign laws and regulations, taxes, changes in competition and pricing environments, fluctuations in currency exchange rates and interest rates and other factors. Should one or more of these risks or uncertainties materialise, or should underlying assumption prove incorrect, actual results may vary materially from those described in this document. We do not intend, and do not assume any obligation, to update or correct the information included in this Presentation.
• There may have been changes in matters which affect the companies herein subsequent to the date of this Presentation. Neither the issue nor delivery of this Presentation shall under any circumstance create any implication that the information contained herein is correct as of any time subsequent to the date hereof or that the affairs of the company/companies have not since changed, and we do not intend, and do not assume any obligation, to update or correct any information included in this Presentation.
• This Presentation is subject to Norwegian law, and any dispute arising in respect of this Presentation is subject to the exclusive jurisdiction of Norwegian courts with Oslo City Court AS exclusive venue.

Highlights Q1 2020

Operations and business during Covid-19

Main priorities	• Keep employees safe and minimize impact on operations • Compliant with public restrictions and recommendations • Monitor potential effects on the industry and NRC Group's business
Operations	• Limited impact on project execution to date • Maintenance and upgrade activities considered critical infrastructure services and will be prioritised in case of resources scarcity

Risk management during Covid-19

Risk factors	• Escalated outbreak or measures can impact productivity and project execution • Efficient project planning and execution dependent on customers announcing and awarding tenders as scheduled • Potential disruptions in the value chain
Mitigating factors	• Tender processes progressing as normal to date • Robust financial position • National public transport agencies represent ~95% of backlog

Q1 key figures – profit & loss

• Revenue in Q1 2020 of NOK 1,254 million (+11%)
• Organic growth +7%
• Growth driven by Finland
• EBITA* in Q1 2020 of NOK -54 million
• Normal seasonal activity
• Partly execution of zero margin projects following project adjustments in Q419
• Small negative effects from weakening NOK vs SEK and EUR
• Limited effects from Covid-19
• Depreciations of NOK 53 million
• Amortisation of NOK 15 million
• Estimate for 2020 is NOK 55 million
• Net financial items: -22 million
• Fx: NOK -4 million

(Amounts in NOK million)	Q1 2020	Q1 2019	FY 2019
Revenue	1 254	1 130	6 193
Operating expenses	1 255	1 132	5 927
EBITDA*	-1	-3	267
Other income and expenses (M&A expenses)	-7	-48	-91
EBITDA	-8	-51	176
Depreciation	53	51	212
EBITA*	-54	-54	55
EBITA	-61	-102	-36
Amortisation	15	18	70
Operating profit/loss (EBIT)	-77	-120	-105
Net financial items	-22	-16	-73
Profit/loss before tax (EBT)	-99	-136	-178

Q1 2020 key figures – balance sheet

• Substantial weakening of NOK vs EUR and SEK during March affecting the balance sheet
• Fx effect on equity: NOK 182 million
• Goodwill and other intangible assets: NOK 3,068 million (increase due to fx: NOK 280 million)
• Cash of NOK 821 million
• Interest-bearing debt including leasing: NOK 1,919 million (increase due to fx: NOK 147 million)
• Leasing liability of NOK 542 million including operational lease of NOK 196 million
• Net debt incl. total leasing: NOK 1,098 million (increase due to fx: NOK 140 million)
• Equity: 45%

(Amounts in NOK million)
ASSETS	31.03.2020	30.03.2019	31.12.2019
Intangible assets	3 068	2 969	2 799
Right-of-use assets	539	573	522
Total other non-current assets	335	319	301
Cash and cash equivalents	821	439	154
Other current assets	1 384	1 484	1 648
Total assets	6 147	5 783	5 423
EQUITY AND LIABILITIES
Total equity	2 777	1 935	2 033
Long-term financial lease liabilities	220	204	214
Long-term operating lease liabilities	130	204	125
Other non-current interest-bearing liabilities	1 210	995	1 161
Other non-current liabilities	65	68	34
Short-term financial lease liabilities	126	111	123
Short-term operating lease liabilities	66	55	63
Other interest-bearing current liabilities	168	758	101
Other current liabilities	1 386	1 453	1 569
Total equity and liabilities	6 147	5 783	5 423

Q1 2020 key figures – cash flow

• Cash flow from operating activities of NOK 57 million		(Amounts in NOK million)	Q1 2020	Q1 2019	FY 2019
	• Discontinued operation: NOK 14 million	Profit/loss before tax	-99	-136	-178
•	Net cash from investments of NOK -8 million • Capex net : NOK -8 million	Net cash flow from operating activities - continuing operations Net cash flow from operating activities - discontinued operations Net cash flow from operating activities	43 14 57	-88 56 -32	-37 109 71
		Net cash flow from investing activities	-8	-1 253	-931
•	Net cash flow from financing activities of NOK 610 million • Net proceeds from private placement NOK 672 million	Net cash flow from financing activities	610	1 339	628
	• Payment of leasing NOK -47 million • Interest NOK -17 million	Net change in cash and cash equivalents Cash and cash equivalents at the end of the period	659 821	54 439	-232 154

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• Payment of final purchase price for Norsk Saneringsservice and Gunnar Knutsen is expected to take place in Q2 20

Robust financial position as at 31 March

• Cash position of NOK 821 million

• NIBD of NOK 1,098 million
• f/x: NOK ~ 140 million 31 March
• Undrawn Revolver Credit Facility of NOK 200 million

Interest-bearing debt

NOK million

Bank and bond maturities NOK million

Short-term focus on restoring profitability through operational improvements

Key focus areas in 2020 and beyond

People: Attract and retain the right leadership, project managers and skilled workforce

Tender process: Strengthen project selection, risk assessment and pricing process

Execution: Strengthen execution model and portfolio governance

Improvement programs progressing according to plan

	Sweden	Rail Norway	Finland
People	• New Country Manager and project directors • Strengthen project management skills through internal training and recruiting	• New management team and proven resources in place • Strengthen project management skills through internal trainings and closer integration with Civil	• Strengthen project management skills through internal training and recruiting • New management group in Maintenance
Tender process	• Improved tender process implemented • Pricing discipline key to regain profitability	• Improved tender selection, risk assessment and pricing implemented • Recruited proven calculation resources on complex Rail construction projects	• Group-wide processes on tender process and risk assessment to be implemented
Execution	• Project- and contract management, cost control and risk management • Extracting operational synergies between Rail construction and Maintenance • Joint machine operations with Norway	• Project- and contract management, cost control and risk management implemented • Resource planning and sub-contractor strategy • Joint machine operations with Sweden • Cooperation with Civil on complex projects	• Risk assessment to be implemented on new projects • Reorganized machine operations and optimize capacity • Capacity adjustments Maintenance

Execution of NOK 55 million overhead reduction target is going according to plan

NRC Finland - Strong quarter

• Revenue: NOK 540 million (NOK 361 million)
• 40% organic growth driven by an additional sale of inventory to FTIA of NOK 110 million and by light rail
• EBITA¹ : NOK -3 million (NOK -13 million)
• Strong performance in light rail
• Lower result in Maintenance due to higher costs related to closure of maintenance area 1
• Capacity adjustments in Maintenance implemented
• Order intake of NOK 512 million
• Low hit rate on track construction projects
• Book to Bill LTM: 1.4

NRC Finland - Tender pipeline down from Q4

EUR 0.13 billion tender pipeline²

EUR million value, # of tenders, next 9 months

• New orders announced in Q1

• Two maintenance contracts valued at EUR 9.3 million in total
• Tender pipeline down from EUR 0.2 billion in Q4 to EUR 0.13 billion mainly due to less tenders in Rail construction
• Tender pipeline in Rail construction does not reflect the expected growth in the market for 2020

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2) NRC Group estimates

NRC Sweden – Developing according to plan

• Revenue: NOK 311 million (NOK 299 million)
• Organic growth: -2%
• EBITA¹ : NOK -27 million (NOK -20 million)
• Execution of zero margin projects following project adjustments in Q4 19 according to plan
• Weakening of NOK vs SEK
• Cost reduction program according to plan
• Improvement program according to plan
• Order intake of NOK 517 million
• Book to Bill LTM: 0.9

NRC Sweden - Growth in tender pipeline

Rail investments and maintenance spending¹

SEK 9.1 billion tender pipeline²

(SEK million value, # of tenders, next 9 months)

• Improved tendering activity

• Rail construction and Civil works pipeline increased from SEK 4.1 billion in Q4 19 to SEK 4.7 billion
• Maintenance increased from SEK 2 billion in Q4 19 to SEK 4.3 billion

• New orders in Q1

• SEK 149 million catenary contract
• SEK 100 million track renewal project
• SEK 75 million ground, foundation and construction contract

NRC Norway - Lower activity

• Revenue: NOK 407 million (NOK 470 million)
• Organic growth: -13%
• Lower activity level in Rail as planned
• Lower revenue and order book in Civil vs Q1 19
• EBITA¹ : NOK -14 million (NOK -5 million)
• Execution of zero margin projects following project adjustments in Q4 19
• Civil and Environment slightly affected by Covid-19
• Rail is improving due to measures implemented
• Weaker results in Environment vs Q1 19
• Improvement program in Rail according to plan
• Order intake of NOK 388 million
• Good wins in Rail. Fierce competition in Civil
• Book to Bill LTM: 1.2
• Covid-19 may affect revenue growth and margins in Environment and Civil going forward

NRC Norway - Tender pipeline still strong

Rail investments and maintenance spending¹

NOK billion, CAGR 2019-24

NOK 7.2 billion tender pipeline²

(NOK million value, # of tenders, next 9 months)

• High tendering activity
• Tender pipeline is still strong in Rail construction and Civil, but down from Q4 19

• New orders in Q1

• NOK 75 million track, electro, signal and ground contract
• NOK 47 million port construction contract
• NOK 200 million extra maintenance spend approved for 2020

Record high order book in Q1 2020

• Order book NOK 8,048 million
• f/x: ~ NOK 734 million
• Order intake of NOK 1.4 billion

593

Q1 20

824

529

Q4 19

• Announced orders NOK 593 million
• Unannounced orders NOK 824 million

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1) Non-performing projects make up 6 % of total order book as at 31 March of which ~ NOK 300 million is scheduled for 2020 execution. Zero margin contribution expected to completion.

Good visibility in backlog

Order book execution by country NOK million

Book-to-bill ratio

Period order intake/revenue

NRC Group positioned in large and growing market with substantial short-term pipeline

NOK 40 billion addressable market ¹

NOK billion, 2020 estimate

NOK 18 billion tender pipeline ²

3,3 3,9 4,7 4,4 0,7 0,9 8,7 5,2 3,9 Rail construction Rail maintenance Civil works NOK billion by segment and country, next 9 months

1) Public filings and NRC Group estimates, includes Project Fornebubanen in Norway 2) Addressable for NRC Group, company estimates. SEK@1.00, EUR@ 11.5

9% annual growth expected in rail investments and maintenance spending

1) Norway: Revised national budget 2020, National Railway Directorate NTP filings. Maintenance figures include Bane NOR operations and renewal. Excluding tram and metro 2) Sweden: National budget 2020, Swedish Transport Administration estimates for 2023-24; Maintenance is shown excluding renewal/Reinvestments. Excluding tram and metro 3) Finland: Finnish Transportation Agency, NRC Group estimates

Summary CEO and CFO

Summary and outlook

• Q1 results reflecting low seasonal activity
• Keep employees safe and maintaining normal project execution amid Covid-19 pandemic
• Improvement programs on track
• 2020 financial targets and long-term ambitions maintained
• Flat revenue development
• EBITA margin to exceed adjusted 2019 level of 2.8%
• Solid tender pipeline

Appendix

Segments – key figures quarterly development

					Reported	Reported	Reported	Reported	Reported**	Reported**	Reported	Reported***	Reported
Norway operations (NOK million)	FY 2016	FY 2017	FY 2018	FY 2019	Q1 2018	Q2 2018	Q3 2018	Q4 2018	Q1 2019	Q2 2019	Q3 2019	Q4 2019	Q1 2020
Total revenue	604	771	1 598	2 281	212	335	421	630	470	545	683	583	407
EBITDA*	13	43	136	186	-1	26	46	65	14	65	75	32	7
EBITA*	2	21	96	97	-7	19	36	48	-5	43	52	8	-14
EBIT*	-2	5	75	70	-13	16	33	39	-13	35	45	2	-18
Sweden operations (NOK million)	FY 2016	FY 2017	FY 2018	FY 2019	Q1 2018	Q2 2018	Q3 2018	Q4 2018	Q1 2019	Q2 2019	Q3 2019	Q4 2019	Q1 2020
Total revenue	1 371	1 613	1 591	1 539	316	498	433	344	299	411	460	370	311
EBITDA*	173	221	27	-77	9	46	32	-60	-7	-13	14	-71	-15
EBITA*	160	198	-8	-125	2	38	23	-71	-20	-24	2	-83	-27
EBIT*	136	179	-16	-125	1	37	17	-71	-20	-24	2	-83	-28
Finland operations (NOK million)	FY 2016	FY 2017	FY 2018	FY 2019	Q1 2018	Q2 2018	Q3 2018	Q4 2018	Q1 2019	Q2 2019	Q3 2019	Q4 2019	Q1 2020
Total revenue				2 388					361	601	712	713	540
EBITDA*				191					4	64	70	53	16
EBITA*				116					-13	45	55	29	-3
EBIT*				75					-24	35	45	19	-14
Total group segment accounts	FY 2016	FY 2017	FY 2018	FY 2019	Q1 2018	Q2 2018	Q3 2018	Q4 2018	Q1 2019	Q2 2019	Q3 2019	Q4 2019	Q1 2020
Total revenue	1 975	2 373	3 176	6 193	528	827	851	971	1 130	1 551	1 850	1 663	1 254
EBITDA*	152	236	132	267	2	66	71	-7	-3	103	153	13	-1
EBITA*	128	190	57	55	-12	51	54	-36	-54	51	105	-47	-54
EBIT*	99	156	29	-15	-18	48	44	-44	-72	34	87	-63	-69

*Before other income and expenses (M&A expenses)

**Design operations reclassified as discontinued operations

***Restated due to deviation from Q4 to full-year 2019 report related to the final settlement of a dispute from 2015