NRC Group — Investor Presentation 2022

Aug 18, 2022

Capital Markets Update

AUGUST 2022

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AGENDA Capital Markets Update 2022

10:00 am	Second quarter and first half 2022 results Henning Olsen and Ole Anton Gulsvik	11:00 am	Performance and market opportunities Arild Moe, Robert Röder and Harri Lukkarinen
10:15 am	Succeeding as a leader in sustainable infrastructure Henning Olsen	11:30 am	Strengthening value creation Ole Anton Gulsvik and Henning Olsen
10:30 am	Leveraging improved operational processes Henning Olsen	11:50 am	Q&A

PART 1

Second quarter and first half 2022 results

KEY FIGURES Improved results and strong order intake

REVENUE

NOK 1.9 billion

Q2 2021: NOK 1.5 billion

EBITA*

NOK 63 million

Q2 2021: NOK 47 million

EBITA* margin

Q2 2021: 3.0% 3.3%

ORDER INTAKE Q2 2021: NOK 2.2 billion

OPERATING CASH FLOW NOK 2.7 billion NOK -90 billion

Q2 2021: NOK -45 billion

ORDER BACKLOG Q2 2021: NOK 6.7 billion NOK 8.3 billion

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

Quarterly revenue and EBITA* per country

Region	Organic growth	Revenue (NOK million)	EBITA* (NOK million)	Notes
NO	+58%	686 700 433 600 500 400 300 200 100 0	70 60 50 18 40 30 2 20 10 0	• Revenue growth of 58% with major improvement in all division • Improved profitability driven by operational improvement in the Environment division • LTM Book to Bill at 1.1
SWE	+34%	516 700 400 600 500 400 300 200 100 0	200 150 100 2 50 0 -50 -12 -100	• Revenue growth of 34% in local currency due to increased volumes in Rail and Civil construction • Improved profitability due to better project margins • LTM Book to Bill at 1.5 in local currency
FIN	+3%	695 712 700 600 500 400 300 200 100 0	-150 65 53	• Increased volumes in rail construction • Decrease in profitability due to the lower activity in light rail • LTM Book to Bill of 1.3 in local currency
	Q2 2022	Q2 2022 Q2 2021	Q2 2022 Q2 2021

HEALTH AND SAFETY Fewer injuries resulting in absence

LTI¹ 4.3

SICKNESS ABSENCE 4.3% Q2 2021: 3.9% Q2 2021: 0

TRI² 16.6 Q2 2021: 7.8 Q2 2021: 20.5

SERIOUS INJURIES

1

1) LTI: Injuries resulting in absence at least one full day per million man-hours (incl. subcontractors). Previously reported as LTI-1. 2) TRI: Frequency of injuries with and without absence for personnel (employees, rented workers and subcontractors) per million hours worked. Previously reported as LTI-2. Figures per YTD 30 June 2022 compared with YTD 30 June 2021.

INFLATION AND SYPPLY CHAIN RISKS Limited impacts of the global economy and the war in Ukraine

Limited supplies from Ukraine

Short term well protected against rise in material and fuel prices

3

Continue to manage risks in projects

PROFIT & LOSS Improved results

EBITA* Profit & loss

(NOK million)	Q2 2022	Q2 2021	FY 2021
Revenue	1 912	1 529	5 957
Operating expenses	1 804	1 430	5 621
Other income and expenses (M&A expenses)	0	-5	-34
EBITDA	109	93	302
Depreciation	-45	-52	196
EBITA*	63	47	139
EBITA	63	41	105
Amortisation	-9	-21	64
Operating profit/loss (EBIT)	54	20	42
Net financial items	-14	-15	-66
Profit/loss before tax (EBT)	40	-5	-24

Notes

• Revenues +25 % from Q2 21

• EBITA* improvement of NOK 16 million compared to same period last year

• EBITA* margin of 3.3% vs 3.0%

BACKLOG Strong order intake and order backlog

EU TAXONOMY Results 1st half 2022

	Eligible	Aligned
Turnover (revenue)	88% 2021: 87%	69% 2021: 62%
Operational expenses (OpEx)	88% 2021: 87%	69% 2021: 63%
Investments (CapEx)	76% 2021: 77%	68% 2021: 64%

PART 2

Succeeding as a leader in sustainable infrastructure

Positioned for profitable growth

Ready to capitalise on leading Nordic position

The leading rail infrastructure company in the Nordics with strong ESG anchoring

Record high order backlog in a growing market resilient to macro downturns

Strengthened tendering and project execution yield improved margins

Leading position in growing market

Markets with strict regulations and high barriers of entry

Nordic rail investments to continue at historically high levels driven by urbanization and sustainability megatrends

Long-term growth supported by National Transport Plans

	#1 in the Nordics	Yearly investments and maintenance
Norway	#2	NOK 21 billion
Sweden	#3	NOK 18 billion
Finland	#1	NOK 10 billion

Competitive advantage through a complete value chain

Unique market position in the Nordics

Competitors with more than NOK 1 billion revenue

Turning sustainability into contract wins

NOK 400 million mass removal and disposal contract for the City of Oslo's new drinking water supply using biogas trucks to significantly reduce the CO2 emissions

NOK 760 million contract for the electrification of Trønder- and Meråkerbanen with 48% reduction of the CO² emissions by optimising concrete volumes and use of low-carbon concrete

Strategic targets

Reduction target for GHG emissions within 2025

30%

Recycling rate in all countries

70%

Net zero emission in the year

2050

Robust foundation for growth and continued improved profitability

	Short-term guiding 2022	Medium-term target 2024-2025	Long-term ambitions
Revenue	Moderate to strong growth	Above 5% growth p.a. over the cycle + bolt-on M&A
EBITA* margin	Moderate increase compared to 2021	4-5 % EBITA*margin	*margin 5-7% EBITA
	Resume dividend distribution
emission reduction 2025 vs. 2022** 30% CO 2

PART 3

Leveraging improved operational processes

Operational improvements focused on project business

		Norway	Sweden	Finland	Notes
Project business ~NOK 4.8 billion LTM	Rail construction				• Refurbishment, upgrades and new build • Medium to big sized projects 30 MNOK – 1,000 MNOK
	Civil construction				• Contracts from 6 - 36 months
	Environment				• Complementary service provider to own projects • Mainly smaller and short-term projects + selective large project
Long-term contract business ~NOK 1.5 billion LTM	Rail maintenance				• Operational maintenance of rail infrastructure • High value contracts 200 MNOK – 1,000 MNOK • Good visibility with contracts from 4 - 7 years
	Rail materials				• Procurement, logistics and warehousing (3PL) of rail materials (FTIA) • Stable business approximately NOK 500 million annually
Develop capabilities to support core rail projects			Market not open for private contractors		• Long term contract 4 + 2 + 2 years

Positioned to gain market share in long-term business portfolio

		Existing contracts	LTM revenue
Rail maintenance	Finland	• 4 out of 20 track maintenance areas • 3 out of 4 electrical areas	~NOK 600 million
	Sweden	• 4 out of 38 areas	~NOK 500 million
Rail material	Finland	• Single supplier	~NOK 400 million

	Notes
•	Long-term contracts with revenue and margin visibility
•	Platform for growth with recent contract wins
•	First maintenance contracts expire in 2024
•	Targeting improved profitability through operational efficiency and scale

• Synergies with rail construction by sharing machinery and expertise

Strengthened project business through transformation

CMU 2020 focus		Actions	Results
Leadership Attract and retain right leadership		• Strengthening management to support improvement processes and integration activities
Tender approach Win the right projects at the right price		• Selecting projects based on competitive edge and commercial potential • Professionalising calculation and risk assessment process	• Improved project margins • A more balanced risk profile in the project portfolio
Project execution Do the projects right		• Strengthening execution model and portfolio governance • Training and developing employees	• Project profitability improves through the lifecycle of the project • Contract wins on sustainability proposition
Sustainability integration Be the most attractive employer of tomorrow's infrastructure		• Attracting and retaining the right leadership, project managers and skilled workforce • Making ESG a competitive advantage

Improved core processes yield results

Loss making projects won before 2020 finished

Improved project margins in rail and civil construction portfolios

Average project profitability 2%-points above 2019

2

Significant reduction of loss-making projects

Significant reduction of projects with low profitability

Still maintaining the upside from good projects

Project margins up 2%-points vs. projects won before 2020

Rail and Civil construction in Finland, Sweden and Norway, contract value > NOK 30 million

Improved project control yields net positive project adjustments

Net project adjustments Group Notes

NOK million, last 12 months, entire project portfolio excl maintenance and environment • Improved processes across all project

• phases from tendering to completion
• Early identification and mitigation of risks and opportunities to improve execution and margins
• Project portfolio subject to assessment and adjustment according to progress and de-risking
• Improved predictability in financial results

Ready to leverage improved operational processes

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

Strategic focus going forward

Margin improvement

Continue to improve core processes 1 2 3

Profitable growth

Increase revenue from large projects

Potential bolt-on M&A to optimise value chain

Increase competitiveness

Implement best practice across the Nordics

Sustainability as a competitive edge

Win the right projects at the right price

A fact-based analytical approach throughout the tender process by

• Selecting projects based on competitive edge and commercial potential
• Professionalising the calculation process
• Group-wide process for commercial risk assessments in the tender phase
• Analytical pricing approach based on systematic use of market intelligence

Operational excellence – do the projects right

Strengthen execution model and portfolio governance by

• Robust project organisation matching capabilities with project challenges
• Strengthen resource planning and sub-contractor strategy
• Contract management
• Implementing new risk management tools
• Monthly processes for governance of production cost vs. actual completion rate

Electrification of Trønder- and Meråkerbanen the first joint win between Norway and Sweden

estimated reduction of CO² emissions by optimising concrete volumes and by utilising low-carbon concrete

Potential bolt-on M&A to optimise value chain ²

Financial capacity to execute M&A

Considering smaller to medium-sized candidates

Focus on profitability and strengthening value chain

Identify and implement best practice through Nordic collaboration

Sharing competence and capacity across countries

Winning and executing big projects with cross-national teams, utilising machinery

Targeting key processes for implementing best practice

Tendering, maintenance, bigger projects, digitalisation

Leverage and strengthen sustainability position and performance

Generate profitable growth, retain and attract talents, accelerate the green shift

PART 4

Regional review

Large markets driven by strong megatrends

Market drivers and characteristics

Population growth and urbanisation drives demand for sustainable infrastructure

International focus on low-carbon transport solutions to reach sustainability targets

National transportation plans provide good visibility on longterm investments

Combined railway maintenance backlog of NOK ~80 billion

Regional differences call for tailored approach

		FY 2019 EBITA* %	LTM Q2'22 EBITA* %	Share of LTM revenue
NRC	Capitalising on leading Nordic position	0.9%	2.8%
NO	Positioned for profitable growth	4.3%	2.9%	34%
SWE	Continued focus on restoring profitability	-8.1%	-2.5%	25%
FIN	Market leadership with proven execution	4.9%	7.3%	41%

PART 4

Regional review Norway

CLOSE-UP ON NORWAY Positioned for profitable growth

Q1 20 Q2 20 Q3 20 Q4 20 Q1 21 Q2 21 Q3 21 Q4 21 Q1 22 Q2 22

Rail construction Civil construction Environment

Leveraging strong market positions

RAIL CONSTRUCTION

Market size NOK 27 billion¹ in 2022 Major projects requiring a full value chain approach #2 position rail technical work

CIVIL CONSTRUCTION

Rail projects with significant civil scope Niches such as harbours and city infrastructure Minor overall market share

ENVIRONMENT

Leading position in mass transportation, Oslo Top 3 position in demolition and recycling Support NRC Group scope in rail projects Wastewater/sewage projects

1) NRC Group estimates, Norways's national budget 2022 and the National Transportation Plan

NITTEDAL STATION Applying full in-house value chain

Project details

Start:	December 2020
Completion:	August 2022
Place:	Nittedal
Customer:	Bane NOR
Value:	NOK 220 million

Timeline

Profitable growth through bigger projects

Projects won before 01.01.20

Projects won after 01.01.20

• Demolition and recycling
• Winning bigger projects to achieve profitable growth and build a stronger organisation
• Training and development of employees and building strong project teams

EBITA* % Environment

Key priorities to drive profitable growth

Continuous focus on tender process, project execution, resource utilisation and professionalisation of organisation Profitable growth through large rail and civil construction projects

Leverage and further develop leading local market positions in environment division to drive profitable growth

Solid tender pipeline with high number of large projects

pipeline compared to Q1 22 mainly related to civil and environment, and a decrease of NOK 0.9 billion vs last year, related to rail constructions

Budget for 2022²NOK 26.7 billion, at same level as 2021 and in National Transport Plan for 2022

Long-term railway spending expected to grow

Long-term public railway spending¹Notes

• Long-term stable to growing market based on the 2022-2033 National Transport Plan (NTP)
• Annual investments in new infrastructure increased 5% in the new NTP
• Increased focus on maintenance and renewal
• Major metro and light-rail projects

PART 5

Regional review Sweden

CLOSE-UP ON SWEDEN Continued focus on restoring profitability

Competitive markets with attractive size and growth potential

RAIL CONSTRUCTION

Market size NOK 14 billion¹in 2022 #3 position Growing market, highly competitive Consolidation in the sub-contractor segment

MAINTENANCE

Market size NOK 14 billion¹in 2022 #3 position Market share 4 of 38 maintenance contracts Stable, competitive market environment

CIVIL CONSTRUCTION

Minor overall market share Executing civil works in Rail projects Niche player with selective tender approach focused on private clients in the Karlstad area

GODSBANEGÅRDEN NORRKÖPING Utilising synergies between rail and civil construction

Project details

Start:	August 2022
Completion:	May 2026
Place:	Norrköping
Customer:	The Swedish Transport Administration
Value:	SEK 157 million

Timeline

Improved profitability in projects won after 2020

Accomplished

• Strengthened tender process
• Stable operations and profitability in Maintenance
• Finished production on loss-making legacy projects in rail and civil
• Projects won after 2020 shows better profitability in Rail Construction

EBITA* %

Maintenance

Projects won before 01.01.20

Projects won after 01.01.20

Key priorities to restore profitability and grow

Improve project execution by development and training of employees

Optimise production and win new contracts to leverage scale effects in maintenance

Enter the NOK 4.5 billion Stockholm metro market

High tender activity expected – focused on profit before growth

MNOK >300 MNOK 100-300 MNOK 30-100

Increase of NOK 0.6 billion in tender pipeline vs Q2 21 and increase of NOK 1.7 billion compared to same period last year explained by both rail construction and maintenance

Budget for 2022² SEK 30.7 billion, +2% higher than estimated in the National Transport Plan

Positioning to benefit from long-term trends

Long-term railway spending¹ Notes

• Growth in investments driven by new railway lines , including high-speed lines, and ERTMS
• Increased maintenance spend with aim to reduce maintenance deficit

PART 6

Regional review Finland

CLOSE-UP ON FINLAND Market leadership with proven execution

Leading market position with growth opportunities

RAIL CONSTRUCTION

Market size EUR 450 million¹ in 2022 #1 position

MAINTENANCE

Market size EUR 350 million² in 2022

#3 position

Market size EUR 290 million in 2022 #1 position

LIGHT-RAIL

1) NRC Group estimates, Finland's national budget 2022 and the National Transportation Plan 2022-2033 2) Value on maintenance area contracts

JOENSUU RAILWAY YARD Executing complex upgrade during ongoing train traffic

Project details

Start:	May 2021
Completion:	December 2023
Place:	Joensuu
Customer:	Finnish Transportation Infrastructure Agency
Value:	EUR 42 million

Timeline

Strong profitability based on solid tendering and execution

Projects won before 01.01.20

Projects won after 01.01.20

Accomplished

• Strong profitability driven by light rail and rail construction
• Right-sized maintenance and machine operations based on lower market share
• Material contracts extended for five years

Maintenance and materials

EBITA* %

Key priorities to drive profitable growth

Add adjacent capabilities within civil construction disciplines to strengthen value chain in rail construction

Keep and develop competitive advantage in light rail to win new projects

Improve profitability and increase market share in maintenance

Increased tender pipeline for maintenance

MNOK >300 MNOK 100-300 MNOK 30-100

pipeline related to maintenance contracts

Decrease of NOK 1.0 billion from same period last year mainly related to reduced tender pipeline for rail construction

Continued high investment level expected for light rail projects in the

Four major light rail contracts coming up for award

Estimated light rail market size

Notes

• projects
• Executed under the alliance project model
• Upcoming tenders for additional 4 projects – total value of EUR 1.1 billion

• Potential revenue impact from 2024

• NRC Group projects: Tampere 1, 2 and 2B, Jokeri Light Rail, Crown bridges

• Other projects: Kalasatama

In design phase, not awarded: Vantaa Tramway, Tampere 3, Western Helsinki, Turku Tramway

Stable long-term growth in railway spending

Long-term public railway spending¹Notes

• New rail developments focused on network upgrades
• Growth in maintenance to repair and replace aging and non-working structures
• Significant projects being developed outside the NTP

Basic maintenance and upgrades New development

PART 7

Strengthening value creation

Leverage on a solid foundation for profitable growth

Revenue and EBITA* margin

EBITA* % Revenue (NOK billion)

* Before other income and expenses

Improvement program is yielding results

Notes

• Improvement program gradually yielding results
• Solid financial recovery during the latter part of the transformation phase
• Higher profit driven by increased margin
• Revenue growth from 2022 on back of strong order intake

Order intake and backlog support further growth

Notes

• Order intake and order backlog at record levels
• Rail infrastructure market remains strong
• Limited impact from economic uncertainties and war in Ukraine
• Well protected from increased material prices and inflation
• Low order backlog risk with public customers representing > 90%*

Leaner asset base with improved utilisation

Improved working capital management

77 173 88 80 164 77 -35 -85 101 Q2 20 Q3 20 Q4 20 Q1 21 Q2 21 Q3 21 Q4 21 Q1 22 Q2 22 Net working capital (NWC) NOK million

NWC – Average of last four quarters

Notes

• Public contracts less flexible focus on internal culture and processes
• Limited counterparty risk due to high share of public customers
• Seasonality in working capital with high trade receivables in second quarter
• Improved working capital management and cash conversion cycle

Delivering steady improvement in cash flow

Cash generation LTM per Q2 22

Notes

• Solid operational cash flow from improved profitability and working capital management
• Targeted investments in tangible assets in line with strategy of lean asset base
• Prioritised an ample cash position and debt instalments during transformation phase

Ensuring a robust financial position

Notes • Solid cash position even at peak working capital season • Undrawn NOK 200 million credit facility • Aligning debt structure with updated strategy and financials

• Improve financial flexibility and reduce cost of debt

600

Flexibility to increase the free cash flow to equity

Leverage ratio: NIBD / EBITDA* LTM ratio	Notes
------------------------------------------	-------

• Long term leverage ratio target NIBD/EBITDA < 2.5x maintained
• Reduced leverage ratio due to increased profitability and prioritized debt instalments
• Flexibility to increase the free cash flow to equity going forward
• Resume dividend payments
• Execute bolt-on M&A

Clear capital allocation priorities

Support existing activities and organic growth

Continue to improve profitability over time

Maintain lean, efficient and sustainable asset base

Manage working capital

Align debt structure with updated strategy

Competitive direct returns over time

Policy of distributing a dividend of minimum 30% of net profit

Accretive M&A

Robust foundation for growth and continued improved profitability

	Short-term guiding 2022	Medium-term target 2024-2025	Long-term ambitions
Revenue	Moderate to strong growth	Above 5% growth p.a. over the cycle + bolt-on M&A
EBITA* margin	Moderate increase compared to 2021	4-5 % EBITA*margin	*margin 5-7% EBITA
	Resume dividend distribution emission reduction 2025 vs. 2022** 30% CO 2

Strategic focus going forward

Margin improvement

Continue to improve core processes 1 2 3

Profitable growth

Increase revenue from large projects

Potential bolt-on M&A to optimise value chain

Increase competitiveness

Implement best practice across the Nordics

Sustainability as a competitive edge

Ready to capitalise on leading Nordic position

The leading rail infrastructure company in the Nordics with strong ESG anchoring

Record high order backlog in a growing market resilient to macro downturns

Strengthened tendering and project execution yield improved margins

Questions?