9M 2021 Results Presentation

16 November 2021

Speakers

Valeriano Salciccia Chief Executive Officer

Fabio De Masi Chief Financial Officer

Alessio Crosa

IR & Sustainability Manager

Key messages

Solid growth in line with expectations
Profitability steady at well above 22%, confirming the manageable impact of raw materials prices
Positive commercial performance sustaining the backlog at above € 1.1 Bn
National Recovery and Resilience Plan implementation proceeding at full speed, underpinned by strong commitments from RFI and Government
Share Capital increase completed and stock admitted to the Euronext STAR Milan segment

9M 2021 Highlights

€ Mln

New contracts with first award in the NRRP framework

During the third quarter, the Group has been awarded contracts worth an overall amount of around € 90 Mln. Among the others:
- Trackworks on the Cancello/Frasso Telesino section of the new Naples-Bari high speed line funded by NRRP funds (see Mission 3 - projects 1.1) and on multiple sites in Germany
- Light civil works renewal in Sardinia, with a framework agreement of a three years duration
- Electrification of some sections of the Foggia Potenza and Rocchetta – Gioia del Colle railway lines and of Ciampino station
- Railway Machines with a supply of new wagons produced by SRT for an Italian customer

3Q new contracts Verona-Padua High Speed line contract

As a JV Leader, Salcef has been selected by the IRICAV 2 Consortium, to perform the construction of a new High Speed Line Verona-Padua section, between Verona and Vicenza junction. Contract signing expected in the coming weeks after the completion of the usual administrative procedures
The overall amount of the contract is € 194.8 Mln, of which about € 147.8 Mln pertaining to the Group company involved. This contract is funded by NRRP funds (see Mission 3 - projects 1.2). Activities will start in February 2022 and finish in March 2026
The contract confirms Salcef Group's expertise in highspeed rail network, having built over 340 km of Italy's highspeed rail network on the Bologna-Florence, Turin-Milan and Padua-Mestre lines (completed) and on the new Naples-Bari line (ongoing)

Recent newsflow reassuring on NRRP implementation

23 September	Decree of the "Ministry of sustainable infrastructures and mobility"
	Out of the € 3.2 Bn of the Complementary Fund devoted to the first component of Mission 3, € 1.55 Bn assigned to the upgrade and enhancement of regional railway networks
29 September	New tenders for NRRP projects1
	In a panel at EXPO Ferroviaria, RFI's CEO and MD stated that by April 2022 RFI will launch 55 tenders for an overall value of € 6 Bn

15 October	Additional resources to RFI
	Within a Law Decree approved by the Council on Ministry, RFI received additional € 1.3 Bn, to be used in 2021, to speed up projects on railway network, also providing more down-payments to the contractors
19 October	projects2 Design phase of NRRP
	In a conference, RFI's CEO and MD stated that by January 2022 the design phase of new projects worth € 12 Bn will be completed. Tenders for these projects will be launched during 2H 2022
27 October	Law Decree "Recovery"
	Within a Law Decree approved by the Council on Ministry to support the implementation of the NPRR, all the procedures for the approval of public investments in railway infrastructures have been simplified
9 November	NRPP funds for regional lines assigned to projects
	mln3 In a Decree of the "Ministry of sustainable infrastructures and mobility", € 836 dedicated to the upgrade of regional lines have been allocated to projects in Umbria, Friuli Venezia Giulia, Piedmont, Puglia, Campania
1. Source:	https://www.fsnews.it/it/focus-on/infrastrutture/2021/9/28/rfi-55-bandi-gare-da-6-miliardi.html

Source: https://www.fsnews.it/it/focus-on/infrastrutture/2021/10/19/rfi-progetti-12-miliardi-entro-gennaio-2022.html
The remaining € 100 mln have been already assigned to 2 specific projects

Strategy further supported by recent Share Capital increase

Share Capital Increase finalized on 1 October 2021, with 2 Mln new ordinary shares issued, for a total value, including share premium, of € 32 Mln
With the free-float requirement (35%) met, on 21 October Salcef Group's shares started to be negotiated on Euronext STAR Milan
Together with the conversion of the Warrant completed in July 2021, in less than 2 years since the listing :
- More than € 108 Mln of new resources received by shareholders
- 20.6 Mln of new ordinary shares¹ , now the only listed security on the market
Remaining Performance and Special Shares to be converted in January 2022

Including 10.4 mln from warrant conversion, 8.2 mln from the conversion of Special Shares (7 ordinary shares each) and Performance Shares (5 ordinary shares each), 2 mln from October 2021 Share Capital Increase
Entirely in the hands of the majority shareholder Finhold s.r.l.
Entirely in the hands of the Promoters of Industrial Stars of Italy 3
Including Promoters and Treasury Shares

Revenues

€ Mln

Consolidated Revenues at € 319.7 Mln, up 35.9% YoY mainly due to:
- Favourable comparison with 9M 2020, impacted by reduction of production due to Covid-19 crisis (€ 12.2 Mln)
- Change in perimeter with the consolidation of Delta (€ 30.4 Mln¹ ) and, to a lesser extent, Bahnbau Nord (€ 3.7 Mln)
Without considering those effects, remarkable organic growth at 16.3%

	9M 2021	9M 2020	Δ (%)
Track and Light Civil Works	220. 6	167.5	31.7%
Energy, Signalling & TLC	41.9	28.8	45.9%
Heavy Civil Works	20.5	15.6	31.1%
Railway Materials	29.0	20.1	43.9%
Railway Machines	7.7	3.3	136.3%
Total	319.7	235.3	35.9%

Focus on Business Units (1/2)

9M 2021 Revenues at € 220.6 Mln, up 31.7% YoY mainly due to:
- Consolidation of Delta
- Ramp-up of track renewal activities in Egypt on the Cairo Alexandria line and further progress in Abu Dhabi for track construction on the Ruwais - Ghuweifat railway
- First activities within the new 3-year framework agreements with RFI
- Execution of recently signed contracts for light civil works in Italy
New contracts for trackworks in Germany
Going forward, activities will be focused on executing new framework agreements and other domestic/international contracts

Track & Light Civil Works Energy, Signalling & Telecommunication

9M 2021 Revenues at € 41.9 Mln, up 45.9% YoY on the back of ongoing production on main contracts
Kick-off of BU activities in Germany
Extension of a contract with Terna for Power Transmission in Northern Italy
Going forward, activities will be focused on executing current agreements in both business segments

Focus on Business Units (2/2)

Heavy Civil Works

9M 2021 Revenues at € 20.5 Mln, up 31.1% YoY mainly due to:
- Final activities on some contracts in Italy recorded in 1H
- Ramp-up of a sizeable contract in Germany
Going forward, production volumes mainly driven by activities in Germany and the execution of the civil works portion of the new Italian High Speed contract

Railway Materials

9M 2021 Revenues at € 29.0 Mln, up 43.9% YoY mainly due to a material step up in production volumes, supported by deliveries within recent contracts with Italian regional rail operator
Testing phase of slab-track prototypes and construction of new production lines proceeding as per plan
Going forward, activities at Overail focused on reaching operational excellence and enlarging the range of products

FOCUS ON RAW MATERIALS PRICES

Railway Machines

9M 2021 Revenues at € 7.7 Mln, up 136.3% YoY mainly due to:
- Consolidation of Delta
- Sales to third-party customers, both Delta in the US and SRT in Italy
New sale contracts for a third-party Italian customer
Going forward, activities will continue to be focused on expanding the third-party market and supporting Group companies
Steel and derivatives, mainly used by Railway Materials and to a lesser extent Railway Machines, is the product category mostly impacted by the recent price increases
Impact at 9M stage mitigated by the use of stock, which broadly covered the first half of the year, and by the fact that the biggest and most expensive items are contractually provided by the customers
Optimization of procurement activities throughout the Group is ongoing and is expected to soften the impact at consolidated level

Revenues by Country

€ Mln

Revenues coming from outside Italy reaching 27% of the total, further growing compared to the 24% recorded in 1H 2021, mainly driven by:
- North America, now at 10% with the consolidation of Delta
- Further growth of the contribution from Middle East, thanks to ongoing activities in Abu Dhabi
- North Africa further growing thanks to the ramp-up of the new contract in Egypt
- Slowdown of Europe, partially offset by the growing contribution from Germany

	9M 2021	9M 2020	Δ (%)
Italy	234.5	190.0	23.4%
Europe [Excluding Italy]	25.5	37.9	(32.6%)
North America	32.0	1.6	N/A
Middle East	24.3	4.9	398.7%
North Africa	3.3	0.9	272.9%
Total	319.7	235.3	35.9%

Economic and Financial KPI

Mln
	9M 2021	9M 2020	Δ (%)
Revenues	319.7	235.3	35.9%
EBITDA	71.5	57.1	25.2%
EBITDA Margin	22.4%	24.3%	-
D&A1	(19.8)	(15.9)	24.0%
EBIT	51.7	41.1	25.7%
EBIT Margin	16.2%	17.5%	-
Adjusted Net Financial Income (Expenses)*	1.6	(1.9)	-
Adjusted EBT	53.3	39.3	35.7%
Adjusted Income Taxes**	(14.3)	(11.8)	21.3%
Adjusted Net Profit	39.0	27.5	41.8%

* Change in warrant fair value	(9.7)	(17.7)	(44.8%)
** DTA reversal related to revaluations	(2.4)	-	-
Net Profit	26.9 9.8		173.4%

Net Financial Position	105.3	20.02	427.6%

EBITDA Margin down 1.9 p.p. vs. 9M 2020 due to the different mix of revenues, mainly generated by the different consolidation perimeter of the subsidiaries. Profitability in line with 1H 2021, confirming the positive result in a context of materially growing volumes
Higher D&A on the back of higher Capex
Tax rate adjusted at 26.9%, down compared to 30.0% in 9M 2020, which not benefitted from fiscal effects of revaluation of certain assets. On a like-for-like basis the two tax rates are comparable. Going forward, on the back of Industry 4.0 tax benefit and without additional benefits, tax rate adjusted expected to be between 27% and 28%
P&L adjustments related to warrant are in line with 1H figure. For FY 2021, last period with this impact, the figure will be exactly the same as the one at 30 September
NFP at € 105.3 Mln (Net Cash) doesn't include any impact related to warrant since they have been fully converted/expired during 3Q. Increase vs. YE2020 mainly due to the contribution from recent share capital increase and warrant conversion

^1. Including impairment losses

^2. Figure at 31 December 2020, adjusted to exclude financial liabilities related to outstanding "warrant in compendio e integrativi" as of 31 December 2020

NFP at 30 September 2021

Backlog

€ Mln

Backlog¹ confirmed at the all-time high € 1.1 Bn, of which € 992 mln (88.2%) from Italian market and € 132 mln (11.8%) from foreign markets
The different time frame of Italian contracts, typically longer than foreign ones, impacts the current composition of the backlog
Track & Light and Civil Works and Energy Signalling & Telecommunication confirmed as the core Business Units, with 92.6% of the total backlog

Does not include agreements between Group companies, to be considered intercompany

Closing remarks

Business momentum supports expectations for a FY solidly confirming the growing path showed so far
Positive outlook in our strategic markets further backed by recent news flow, including the approval of \$ 1.2 trillion US Bipartisan Infrastructure Deal, with \$ 105 Bn devoted to railways and public transit
New contract for the Verona-Padua high speed line supports confidence in a timely implementation of NRRP projects

Evaluation of potential targets for M&A ongoing

Q&A

Appendix

Recent history

Focus on Italian National Recovery and Resilience Plan (1/3)

Mission 3 Infrastructure for a sustainable mobility	EU Recovery and Resilience Facility (RRF)	Complementary Fund	TOTAL
Component 1: Investments on railway network	€ 24.8 Bn	€ 3.2 Bn	€ 28 Bn	€ 31.5 Bn
Component 2: Integrated Logistics	€ 0.6 Bn	€ 2.9 Bn	€ 3.5 Bn

Stations; 0,7 Bn Regional Lines;

0,9 Bn

	TOTAL	2020	2021	2022	2023	2024	2025	2026
1.1 High-speed railway connections to the South for passengers and freight	4,640	52	125	359	748	919	1,125	1,313	TARGET: 274 km of new HS lines
Napoli - Bari	1,400	30	80	143	180	271	352	344
Palermo - Catania - Messina	1,440	22	25	100	199	283	439	372
Salerno - Reggio Calabria	1,800	0	20	116	369	365	334	596
1.2 High-speed lines	8,570	550	881	904	758	2,030	1,935	1,512	TARGET: 274 km of new HS lines
Brescia - Verona - Padova	3,670	152	341	440	76	900	1,096	665
Liguria - Alpi	3,970	398	532	454	636	886	559	505
Verona - Brennero	930	0	8	10	46	244	280	342
1.3 Cross-country connections	1,580	2	9	52	175	301	427	614	TARGET: 87 km of new lines
Orte - Falconara	510	0	1	27	61	92	125	204
Roma - Pescara	620	0	2	16	57	125	186	234
Taranto - Metaponto - Potenza - Battipaglia	450	2	6	9	57	84	116	176
1.4 ERTMS	2,970	0	50	299	425	563	705	928	TARGET: 3,400 km of lines equipped with ERTMS
1.5 Upgrading metropolitan railway junctions and key national rail networks	2,970	172	189	280	320	616	715	680	TARGET: 1,280 km of lines upgraded
1.6 Upgrading regional railways	936	41	116	30	158	254	152	185	TARGET: 680 km of lines enhanced
1.7 Improvement, electrification and more resilience for Southern railways	2,400	0	53	187	217	506	700	737	TARGET: 573 km of lines enhanced
1.8 Enhancement of Southern Italian train stations	700	0	21	64	103	195	192	125	TARGET: 54 stations upgraded
	24,766	817	1,443	2,175	2,903	5,384	5,951	6,094

Focus on Italian National Recovery and Resilience Plan (2/3)

Mission 3 Infrastructure for a sustainable mobility	EU Recovery and Resilience Facility (RRF)	Complementary Fund	TOTAL
Component 1: Investments on railway network	€ 24.8 Bn	€ 3.2 Bn	€ 28 Bn	€ 31.5 Bn
Component 2: Integrated Logistics	€ 0.6 Bn	€ 2.9 Bn	€ 3.5 Bn

	TOTAL	2020	2021	2022	2023	2024	2025	2026
Upgrading regional railways (which are not owned/operated by RFI)	1,550	0	150	360	405	377	248	10
Securing of regional railways	454
of fleet Upgrade and renewal rolling stock	278
Enhancement of regional rail network with simultaneous upgrade and/or renewal of rolling stock fleet	140
Enhancement of regional railways	677
of Renewal rolling stock	200	0	60	50	40	30	20	0
Safe of roads - Implementation a system for dynamic monitoring remotely controlling bridges, viaducts and tunnels (A24-A25)	1,000	0	150	150	90	337	223	50
Safe of roads - Implementation a dynamic monitoring system for remotely controlling bridges, viaducts and tunnels (ANAS)	450	0	25	50	100	100	100	75
	3,200	0	385	610	635	844	591	135

Already allocated through a decree of the Ministry of sustainable infrastructures and mobility, to 29 projects, with the overall amount allocated 81% to the South and 19% to the Centre-North
With the only exceptions of the upgrade and renewal of the rolling stock fleet and some technological works in the signalling field, all the other projects are potentially in the scope of Group's core business

Focus on Italian National Recovery and Resilience Plan (3/3)

Component 2: Renewable Energy, hydrogen, power grids and sustainable mobility	Facility (RRF) € 23.8 Bn	€ 1.4 Bn	€ 25.2 Bn	€ 59.5 Bn
Mission 2 Green revolution and ecological transition	EU Recovery and Resilience	Complementary Fund	TOTAL

FOCUS ON AREA # 4 – DEVELOP MORE SUSTAINABLE LOCAL PUBLIC TRANSPORTATION
-----------------------------------------------------------------------------	--

	TOTAL	2021	2022	2023	2024	2025	2026
4.1 Encouraging cycling	600	0	130	225	100	80	65
4.2 Rapid mass transportation development	3,600	180	476	709	967	738	530
of 4.3 Installation eletric charging infastructure	741	0	0	400	150	141	50
of fleets 4.4 Renovation bus and green trains	3,639	0	440	594	931	979	695
	8,580	180	1,045	1,928	2,148	1,939	1,340

SUBWAYS

€ 0.7 Bn for 11 km of new subways, rolling stock and technical/civil works

TRAMWAYS

€ 2 Bn for 85 km of new tramways, rolling stock and technical/civil works

TROLLEY WAYS and FUNICULARS

€ 0.9 Bn for 120 km of new trolley ways and 15 km of new funiculars

Projects will be mainly focused on the metropolitan areas of the major Italian cities.
Expenditures have been already agreed between the Ministry of sustainable infrastructures and mobility and the Local Authorities. Final Decree expected soon

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Contacts

Alessio Crosa Investor Relations & Sustainability Manager

Tel: +39 06 416281 E-mail: [email protected]

Bloomberg: SCF:IM Reuters: SCFG.MI Borsa Italiana: SCF

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