Salcef Group — Investor Presentation 2022

Aug 5, 2022

1H 2022 Results Presentation

5 August 2022

Speakers

Valeriano Salciccia Chief Executive Officer

Fabio De Masi Chief Financial Officer

Alessio Crosa IR & Sustainability Manager

Key messages

• Oustanding commercial performance, with book-to-bill in 2Q at 2.2x, further pushing the Backlog at above € 1.3 Bn
• Revenues in line with expectations, with ramp-up of big projects to boost production in second half
• Business unit acquired from PSC Group up and running
• Profitability flat QoQ at above 20%
• Commitment to the implementation of the NRRP and future spending in maintenance activities reinforced by the new Ferrovie dello Stato's 2022-2031 Industrial Plan (€ 110 Bn dedicated to the railway infrastructure) and the new 2022-2026 Programme Contract between the Ministry of Infrastructure and Sustainable Mobility and RFI
• FY 2022 guidance for top-line and EBITDA margin confirmed

€ Mln

1. Net of € 1.6 mln already recorded in 1H 2021

Revenues

€ Mln

• Consolidated Revenues at € 230.5 Mln, up 8.0% YoY mainly due to:
  • Organic growth at 2.8%, supported by Track & Light Civil Works (6.8%) and Energy, Signalling & Telecom (9.1%), whose contribution was offset by lower production at Heavy Civil Works and Railway Materials
  • Contribution of Bahnbau Nord (€ 8.5 Mln¹ ) in Track & Light Civil Works and of the recently acquired business unit of the PSC Group (€ 2.5 mln) in Energy, Signalling & Telecom

	1H 2022	1H 2021	Δ (%)
Track and Light Civil Works	162.9	144.6	12.6%
Energy, Signalling & Telecom	33.3	28.2	18.1%
Heavy Civil Works	9.8	12.1	(19.0%)
Railway Materials	17.8	19.3	(7.6%)
Railway Machines	6.7	9.2	(27.3%)
Total	230.5	213.4	8.0%

70.6%			Track & Light Civil Works (67.8% in 1H 2021)

• 14.5% Energy, Sign. & Telecom (13.2% in 1H 2021)
• 4.3% Heavy Civil Works (5.7% in 1H 2021)
• 7.7% Railway Materials (9.0% in 1H 2021)
• 2.9% Railway Machines (4.3% in 1H 2021)

Focus on Business Units (1/2)

1H 2022 Revenues at € 162.9 Mln, up 12.6% YoY mainly due to:

• Activities within the new 3-year framework agreements with RFI
• Track renewal activities in Egypt on the Cairo Alexandria line
• Activities in Abu Dhabi at regime
• Higher contribution from light civil works in Italy
• 2H production to benefit from recently signed contracts in Italy and US

Track & Light Civil Works Energy, Signalling & Telecommunication

• 1H 2022 Revenues at € 33.3 Mln, up 18.1% YoY mainly due to:
  • Consolidation of the railway business unit acquired by PSC Group
  • Growing contribution from Germany and from the new contracts acquired in 2021
• Going forward, activities will be focused on executing current agreements in both segments and on integrating the recently acquired business
• Backlog approx. € 180 mln higher thanks to M&A and new contracts
• Signalling activities now accounting for approx. 4% of the business

Focus on Business Units (2/2)

• 1H 2022 Revenues at € 9.8 Mln, down 19.0% YoY
• 2H production volumes mainly driven by the activities on the Italian Verona-Padua High-Speed line just started

Railway Materials

• 1H 2022 Revenues at € 17.8 Mln, down 7.6% YoY with lower production volumes mainly due to the maintenance activities on one production line
• New production line for FAST System completed
• First test installation of FAST System ongoing
• Going forward, activities at Overail focused on reaching operational excellence and enlarging the range of products

Railway Machines

• 1H 2022 Revenues at € 6.7 Mln, down 27.3% YoY
• Combined impact of temporary lower production in the US and another quarter of increasing activities for Group companies accounted for as intercompany
• Going forward, activities will be focused on supporting Group companies

Revenues by Geography

€ Mln

• Domestic revenues solidly growing 14.4% (12.9% organic)
• Revenues from our strategic markets up 15.8%, with contribution from Germany up 7.1% organically. North America lower YoY as expected and already recovering vs. 1Q 2022
• Activities in Middle East / North Africa down 48.5%, with the lower production in Abu Dhabi partially offset by increasing activities in Egypt

	1H 2022	1H 2021	Δ (%)
Italy	185.9	162.4	14.4%
Europe [Excluding Italy]	20.0	14.9	33.8%
North America	17.0	21.3	(20.2%)
Middle East	3.5	13.2	(73.5%)
North Africa	4.1	1.5	165.9%
Total	230.5	213.4	8.0%

80.7%	Italy (76.1% in 1H 2021)
8.7%	Europe (excl. Italy) (7.0% in 1H 2021)
7.4%	North America (10.0% in 1H 2021)
1.5%	Middle East (6.2% in 1H 2021)
1.8%	North Africa (0.7% in 1H 2021)

Economic and Financial KPI

€ Mln

	1H 2022	1H 2021	Δ (%)
Revenues	230.5	213.4	8.0%
EBITDA	46.3	48.0	(3.7%)
EBITDA Margin	20.1%	22.5%	-
D&A	(16.7)	(13.6)	23.3%
EBIT	29.5	34.5	(14.4%)
EBIT Margin	12.8%	16.1%	-
Adjusted Net Financial Income (Expenses)*	1.6	1.8	-
Adjusted EBT	31.1	36.2	(14.2%)
Adjusted Income Taxes**	(8.7)	(9.8)	(11.7%)
Adjusted Net Profit	22.4	26.4	(15.2%)

* Fair value change of warrant and financial investments	(8.2)	(9.6)	-
** DTA reversal related to revaluations and non-recurring tax expenses	(0.5)	(1.6)	-
Net Profit	13.8	15.3	(9.9%)

Adjusted Net Financial Position¹ 69.1 114.5²

EBITDA Margin down 2.4 p.p. vs. 1H 2021. Flat vs. 1Q 2022 confirming resilience in the current context of higher production costs

Higher D&A on the back of higher Capex made both in 2021 and in 1H 2022 in line with the Group's CAPEX plan

P&L adjustments related to:

• Change in fair value of financial investments and, only for 2021, of the warrant
• DTA reversal

(39.7%)

Adjusted NFP at € 69.1 Mln (Net Cash) include the approx. € 25 mln paid to the PSC Group for the acquisition of the railway business unit and dividend paid for € 28,5 mln

1. 2022 figure does not consider the fair value change on financial investments

2. Figure at 31 December 2021

Adjusted NFP at 30 June 2022

Backlog

€ Mln

• Backlog¹ up further at record € 1.35 Bn, of which € 1,135 mln (84.3%) from Italian market and € 212 mln (15.7%) from foreign markets
• Overall weight of domestic backlog still impacted by the different time frame of Italian contracts, typically longer than foreign ones. Compared to FY 2021, slight increase of the international component due to the contracts signed in the US

1,347

Track & Light and Civil Works and Energy Signalling & Telecommunication confirmed as the core Business Units, with 85.3% of the total backlog

Business Unit	Amount	%
Track and Light Civil Works	838.9	62.3%
of which Foreign	201.3	14.9%
Signalling & Telecom Energy,	309.2	23.0%
of which Foreign	3.9	0.3%
Civil Works Heavy	150.0	11.1%
of which Foreign	4.7	0.3%
Railway Machines	5.9	0.4%
of which Foreign	1.9	0.1%
Railway Materials	42.7	3.2%
Total	1,346.6	100.0%
Italy	1,135.0	84.3%
Foreign	211.7	15.7%

2022 Outlook

• Business volumes expected to solidly continue in the growth trend (around 10% organic), mainly driven by:
  • Execution of the contracts for the Verona-Padua high-speed line
  • Consolidation within the Energy, Signalling & Telecommunication BU of the recently acquired business starting from May 2022
  • Further growth of the core business in Italy
  • No exposure to Russia or other countries involved in EU sanctions
• In the current scenario and excluding any further deterioration, EBITDA margins for 2022 expected to remain broadly in line with 1H level, with higher EBITDA in absolute terms
• 2022 Capex expected at € 48 mln (€ 27 mln at 1H stage) with a strong focus on strengthening the production capacity and developing new businesses.

Q&A

Appendix

Active in the railway sector for more than 70 years

Market scouting for additional M&A opportunities

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

Mission 3 and Resilience Infrastructure for a sustainable mobility		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

2020-2021 overall expenditure at € 2.5 Bn, higher than the € 2.3 Bn budget

	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 Complementary and Resilience Fund Facility (RRF)
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
of regional railways Securing	454
Upgrade and renewal of rolling stock fleet	278
Enhancement of regional rail network with of simultaneous upgrade and/or renewal fleet rolling stock	140
Enhancement of regional railways	677
Renewal of rolling stock	200	0	60	50	40	30	20	0
Safe roads - Implementation of a dynamic monitoring system for remotely controlling bridges, viaducts and tunnels (A24-A25)	1,000	0	150	150	90	337	223	50
Safe roads - Implementation of a dynamic system for remotely monitoring 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	2020	2021	2022	2023	2024	2025	2026
Encouraging cycling 4.1	600	0	0	130	225	100	80	65
Rapid mass transportation 4.2 development	3,600	0	180	476	709	967	738	530
Installation of eletric charging 4.3 infastructure	741	0	0	0	400	150	141	50
of bus fleets and 4.4 Renovation green trains	3,639	0	0	440	594	931	979	695
	8,580	0	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

Disclaimer

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Contacts

Alessio Crosa Investor Relations & Sustainability Manager

Tel: +39 06 416281 E-mail: investor.relations@salcef.com

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