Salcef Group — Investor Presentation 2022

Mar 17, 2022

FY 2021 Results Presentation

17 March 2022

Speakers

Valeriano Salciccia Chief Executive Officer

Fabio De Masi Chief Financial Officer

Alessio Crosa

IR & Sustainability Manager

Key messages

• A year of consistent delivery in line with expectations and strategic targets
• Solid growth trends and profitability confirmed also in 4Q
• Remarkable commercial performance leading to a € 1.2 Bn Backlog. Good start to the year with ~€ 100 Mln new contracts in Italy and the US
• National Recovery and Resilience Plan already materializing into new contracts, with 2022 to be the key year for new tenders
• Distribution of a € 0.46 dividend proposed to the AGM (vs. € 0.42 last year)
• 2022 to confirm sizeable growth, with activities focused on operational excellence, industrial/new products development, M&A

Robust growth since IPO…

€ Mln

…with room and strong commitment to further boost it in the coming years

1. Adjusted to exclude the impact on financial expenses of the fair value gains and losses on the "warrant in compendio e integrativi" and, only for 2020 and 2021, the tax impact of the reversal of deferred tax assets on revaluations

2. 2019 and 2020 adjusted to exclude financial liabilities related to outstanding "warrant in compendio e integrativi" as of 31 December 2021 and 31 December 2020 respectively

Progresses on NRPP implementation

Funds already flowing into contracts

2 contracts signed for more than € 200 mln for the construction of the new high-speedhigh-capacity Verona-Padua railway line

Timely entry into force of sector reforms

• 1. Regulatory change that reduces the authorization process for new railway projects from 11 to 6 months
• 1. Legislative change that shortens the approval process of the Program Contract between the Ministry of Infrastructure and Sustainable Mobility and RFI

Tenders focused on 2022

During a public event, the CEO and COO of RFI announced that in 2022 19 new tenders for € 15.5 Bn will be launched, of which approximately € 6 Bn in 1H² . New tenders will be based on new pricing lists, recently adapted to CPI

Delivery of investments

2020-2021 expenditures by RFI at € 2.5 Bn, higher than the € 2.2 Bn budget, mainly driven by progresses on the already ongoing HS projects¹

GROWING DEMAND FOR RAILWAY MAINTENANCE EXPECTED

The "Strategic paper on railway mobility of people and freight", issued at the end of December 2021 and aimed at speeding up the approval of the 2022-2026 PCO, includes an overview of the future maintenance needs

	Ordinary Maintenance	Extraordinary Maintenance
2016-2021 PCO	1	0.8
2022-2026 PCO (to be approved)	1.2	2.2
	PHYSICAL INFRASTRUCTURE: 1.5
ENERGY INFRASTRUCTURE: 0.2
TECHNOLOGICAL INFRASTRUCTURE: 0.3
OTHER: 0.2

Spending for maintenance activities +80% vs. previous PCO mainly due to increasing demand of transportation and growing network size (+540 km of new HS lines, upgrade/development of ~1,900 km of national lines and 700 km electrified)

1. Source: https://www.ilsole24ore.com/art/pnrr-19-gare-rfi-2022-AE6iUxIB

Revenues

€ Mln

• Consolidated Revenues at € 440.1 Mln, up 29.3% YoY mainly due to:
• Outstanding organic growth at 17.8%
• Change in perimeter with the full consolidation of Delta (€ 32.7 Mln¹ ) and, to a lesser extent, Bahnbau Nord (€ 8.5 Mln) impacting mainly Track & Light Civil Works, which without these contributions grew 14% organically
• Allocation among BUs broadly stable YoY

	FY 2021	FY 2020	Δ (%)
Track and Light Civil Works	314.3	241.4	30.2%
Energy, Signalling & TLC	57.8	43.8	31.8%
Heavy Civil Works	21.6	19.0	13.7%
Railway Materials	36.1	25.6	41.2%
Railway Machines	10.4	10.5	(1.2%)
Total	440.1	340.3	29.3%

• 71.4% Track & Light Civil Works (70.9% in FY 2020) 13.1% Energy, Signalling & TLC (12.9% in FY 2020)
• 4.9% Heavy Civil Works (5.6% in FY 2020)
• 8.2% Railway Materials (7.5% in FY 2020)
• 2.4% Railway Machines (3.1% in FY 2020)

Focus on Business Units (1/2)

FY 2021 Revenues at € 314.3 Mln, up 30.2% YoY mainly due to:

• Activities within the new 3-year framework agreements with RFI
• Consolidation of Delta for € 43 Mln
• Track renewal activities in Egypt on the Cairo Alexandria line
• Final phase of the track construction project on the Ruwais Ghuweifat railway in Abu Dhabi and kick-off of a second project for freight facilities on the same line
• Execution of light civil works contracts in Italy
• Going forward, activities will be focused on executing new framework agreements and other domestic/international contracts

Track & Light Civil Works Energy, Signalling & Telecommunication

• FY 2021 Revenues at € 57.8 Mln, up 31.8% YoY mainly due to:
• Ongoing production on main contracts in Italy
• First contribution from Germany
• Going forward, activities will be focused on executing current agreements in both segments and on integrating the recently acquired business

Focus on Business Units (2/2)

• FY 2021 Revenues at € 21.6 Mln, up 13.7% YoY mainly due to:
• Final activities on some contracts in Italy recorded in 1H
• Execution of a sizeable contract in Germany
• Delivery of the new Olbia station in Sardinia
• Going forward, production volumes mainly driven by the civil works portion of the 2 new Italian High-Speed contracts for the Verona-Padua line and activities in Germany

Railway Materials

• FY 2021 Revenues at € 36.1 Mln, up 41.2% YoY with the production volumes that reached >500k sleepers
• Slab-track prototypes ready for the authorization by RFI
• New production lines expected to be fully operative during 2022

• Going forward, activities at Overail focused on reaching operational excellence and enlarging the range of products

• FY 2021 Revenues at € 10.5 Mln, down 1.2% YoY

• Overall business volumes higher YoY with the consolidated figure impacted by higher activities for Group companies accounted for as intercompany
• Consolidation of Delta and full contribution for the second plant in Italy
• Going forward, activities will be focused on expanding the US business and the third-party market as well as supporting Group companies

FOCUS ON RAW MATERIALS PRICES

• Steel and derivatives, mainly used by Railway Materials and to a lesser extent Railway Machines, is the product category mostly impacted by the price increases especially during 2H 2021
• Limited exposure to prices of the most expensive components of the railway infrastructure (i.e. tracks, copper wires) confirmed as they will continue to be bought directly by customers
• Overall impact at FY 2021level at around € 1.5 Mln

Revenues by Geography

€ Mln

• Revenues coming from outside Italy at 26.4% of the total, up compared to the 19.5% recorded in 2020, mainly driven by:
• North America, now at 10% with the consolidation of Delta
• Further growth of the contribution from Middle East, thanks to activities in Abu Dhabi
• Slowdown of Europe, partially offset by the growing contribution from Germany

	FY 2021	FY 2020	Δ (%)
Italy	324.0	274.0	18.2%
Europe [Excluding Italy]	39.4	46.0	(14.5%)
North America	43.4	10.7	305.9%
Middle East	28.9	6.7	331.4%
North Africa	4.5	2.9	58.2%
Total	440.1	340.3	29.3%

73.7%	Italy (80.5% in FY 2020)
8.9%	Europe (excl. Italy) (13.5% in FY 2020)
9.8%	North America (3.1% in FY 2020)
6.6%	Middle East (2.0% in FY 2020)
1.0%	North Africa (0.8% in FY 2020)

Economic and Financial KPI

FY 2021 FY 2020 Δ (%) Revenues 440.1 340.3 29.3% EBITDA 97.3 78.9 23.3% EBITDA Margin 22.1% 23.2% - D&A¹ (29.1) (20.6) 41.4% EBIT 68.2 58.3 16.9% EBIT Margin 15.5% 17.1% - Adjusted Net Financial Income (Expenses)* 1.9 (2.0) - Adjusted EBT 70.1 56.3 24.5% Adjusted Income Taxes** (17.8) (14.6) 22.0% Adjusted Net Profit 52.2 41.7 25.3% € Mln

Net Financial Position	114.5	20.02	474.0%
Net Profit	39.3	41.3	173.4%
** DTA reversal related to revaluations	(3.1)	15.7	-
* Change in warrant fair value	(9.7)	(16.1)	(39.6%)

• EBITDA Margin down 1.1 p.p. vs. FY 2020 due to the different mix of revenues, mainly generated by the different consolidation perimeter of the subsidiaries, and to some inflation headwinds mainly in 4Q 2021
• Higher D&A on the back of higher Capex
• Tax rate adjusted at 25.5%, slightly down compared to 26.0% in 2020. Going forward, tax rate adjusted expected to be between 27% and 28% (see dedicated slide)

P&L adjustments related to:

• warrant are flat over the 9M 2021 figure as expected. Compared to FY 2020 reduction due to the conversions occurred during 2021
• DTA reversal

• NFP at € 114.5 Mln (Net Cash) doesn't include any impact related to warrant since they have been fully converted/expired during 3Q 2021. Increase vs. 2020 mainly due to € 107 Mln upside from warrant conversion and Sept. share capital increase

• Adjusted to exclude financial liabilities related to outstanding "warrant in compendio e integrativi" as of 31 December 2020

^1. Including impairment losses

Focus on Capex

• FY 2021 Capex at € 46.6 Mln, slightly higher than budget (€ 44.7 mln)
• Development Capex (Upgrade + New Business) broadly aligned with expectations but with a different mix mainly due addition investments in a new track works machine that offset lower than expected investments in production plant for the Railway Materials business
• 2022 Capex expected to further grow (+2%) with a strong focus on Track & Light Civil Works and Railway Materials accounting for 81% of the total
• Business Upgrade (+46%) and New Businesses (+24%) to benefit from lower capex on Ordinary Business

Ordinary Business: investments to maintain of existing production capacity, the quality standards required by customers and the achievement of budget objectives Business upgrade: investments to upgrade existing production lines, with new plants, machinery or equipment, allowing for an increase in production capacity New business line: investments related to the design and production of new products in order to open new strategic business lines

Focus on Tax

€ Mln

• FY 2021 final tax impact of € 20.99 Mln
• Effective tax rate without DTA on Capex effect (Base tax fee / Adjusted EBT) is equal to 25.5% (26% in FY 2020)

• Capex Fiscal Impact 2021 at € 5.62 Mln, in line with expectations. 2022-2028 figures do not include Capex from 2022 onwards

• Calculated on Capex until 31.12.21

NFP at 31 December 2021

Backlog

€ Mln

• Backlog¹ at the all-time high € 1.2 Bn, of which € 1,086 mln (90.4%) from Italian market and € 115 mln (9.6%) from foreign markets, even higher that the 9M 2021 figure
• The different time frame of Italian contracts, typically longer than foreign ones, impacts the current composition of the backlog together with the sizeable contracts signed during 4Q in Italy (High-speed line Verona-Padua)
• Track & Light and Civil Works and Energy Signalling & Telecommunication confirmed as the core Business Units, with 91.7% of the total backlog

Book-to-bill ratio at 2.36, with a 1.63 in 4Q

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

Business priorities for 2022

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
• Current geopolitical scenario and the related tensions on the entire value chain expected to impact on cost base (fuel, transport, subcontractors, raw materials). Since it is not related to company activities and substantially out of our control, the overall impact at EBITDA level is difficult to be estimated and it will depend on the evolution of the situation
• 2022 Capex expected at € 48 mln 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 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

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 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
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
4.1 Encouraging cycling	600	0	0	130	225	100	80	65
4.2 Rapid mass transportation development	3,600	0	180	476	709	967	738	530
of 4.3 Installation eletric charging infastructure	741	0	0	0	400	150	141	50
of fleets 4.4 Renovation bus and 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

THIS PRESENTATION IS NOT AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO PURCHASE, OR SUBSCRIBE FOR, SECURITIES

IMPORTANT: Please read the following before continuing. For the purposes of this disclaimer, this presentation (the "Presentation") comprises the attached slides and any materials distributed at, or in connection with, the Presentation. This Presentation and the information, statements and opinions contained herein have been prepared by Salcef Group S.p.A. (the "Company" or "Salcef") for use during meetings with investors and financial analysts and is solely for information purposes and may not be reproduced or redistributed to any other person. The following applies to the Presentation, the oral presentation and any question and answer session that follows the oral presentation.

This Presentation may contain forward-looking statements about the Company, and/or the group headed by Salcef (the "Group"), based on current expectations and opinions developed by the Company, as well as based on current plans, estimates, projections and projects of the Group. Forward looking statements include (but are not limited to) statements identified generally by the use of terminology such as "may", "will", "should", "plan", "expect", "anticipate", "estimate", "believe", "intend", "project", "goal", "aim", "foresee", or "target" or the negative of these words or other variations on these words or comparable terminology. By their nature, forwardlooking statements are based upon various assumptions, expectations, projections, provisional data, many of which are based, in turn, upon further assumptions, including, without limitation, examination of historical operating trends and other data available from third parties. Projections, estimates and targets presented herein are based on information available to Salcef as at the date of this Presentation. Because these forward-looking statements are subject to risks and uncertainties, actual future results or performance may differ materially from those expressed in or implied by these statements due to any number of different factors, many of which are beyond the ability of the Company and/or the Group to control or estimate. You are cautioned not to place undue reliance on the forward-looking statements or other information contained in this Presentation. The information contained herein has a merely informative and provisional nature and does not constitute investment, legal, accounting, regulatory, taxation or other advice. This Presentation speaks as of the date hereof and the information contained herein is provided as at the date of this Presentation and, except to the extent required by applicable law, Salcef nor any other person is under any obligation to update and keep current this Presentation, nor the information contained in this Presentation or any other written, electronic or oral information provided in connection with this Presentation. The information contained herein may be subject to updating, completion, revision and amendment and may change materially without notice. Any reference to past performance or trends or activities of Salcef or the Group shall not be taken as a representation or indication that such performance, trends or activities will continue in the future.

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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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