Salcef Group — Investor Presentation 2023

Mar 17, 2023

FY 2022 Results Presentation

17 March 2023

Speakers

Valeriano Salciccia Chief Executive Officer

Fabio De Masi Chief Financial Officer

Alessio Crosa IR & Sustainability Manager

Key messages

DELIVERING ON PROMISES

Three years after the IPO, almost all the proceeds have been invested in the development of the Group, which is now bigger, stronger and more integrated

GROWTH

• Revenue growth above expectations, with a remarkable 4Q bringing the organic growth at 21.5%
• EBITDA reaching € 114 mln with profitability kept at above 20% as promised
• Backlog at € 1.7 Bn supported by new acquisitions, with an organic book-to-bill at 1.35x

ESG

• Group performance improved on all the 3 dimensions confirming Group commitment
• Better ESG ratings from MSCI and Ecovadis
• Sustainability Committee established within the BoD to further support ESG strategy and targets

AMBITION

• New BU Rail Grinding & Diagnostics launched to catch market opportunities leveraging on our integrated business model
• Capex Plan to further boost investments to support organic growth
• 3 2023 expected to be another year of consistent ramp up of volumes, with EBITDA margin to remain broadly in line with 2022

A different shape with the same goal…

€ Mln

…continue growing with financial and operative discipline to deliver return to our shareholders

1. 2020 and 2021 adjusted to exclude the impact on financial expenses of the fair value gains and losses on the "warrant in compendio e integrativi" and the tax impact of the reversal of deferred tax assets on revaluations. 2022 adjusted to exclude the tax impact of the reversal of deferred tax assets on revaluations and to exclude the impact on financial expenses of the fair value change on financial investments

4

2022 vs. 2019

Rail Grinding & Diagnostics

Vulcano LGT Orlando, FL

Vulcano HVY Ancona

– All-inclusive solutions

track maintenance

• High production capacity thanks to high performance engines and grinding motors
• Extremely accurate measuring system to optimize solutions and maximize results
• Environmental Sustainability with Stage V engines and dust extraction system
• Current Group's fleet for grinding activities is made of 5 Vulcano series rail grinders and a smaller grinder, all built internally by SRT
• Vulcano rail grinders, in their Heavy and Light versions, are designed with modular principles to assure high productivity. Thanks to their flexibility they can be adapted for operation on all the lines, from High Speed to metro, tramlines and narrow-gauge railways

Revenues

€ Mln

• Consolidated Revenues at € 564.6 Mln, up 28.3% YoY mainly due to:
• Organic growth at 21.5%, mainly supported by Heavy Civil Works (144.2%) benefitting form the increasing volumes on the Verona-Padua HS line contract, and Energy, Signalling & Telecom (23.6%)
• Contribution of Bahnbau Nord (€ 22.7 Mln¹ ) in Track & Light Civil Works and of the recently acquired business unit of the PSC Group (€ 15.9 mln) in Energy, Signalling & Telecom

	2022	2021	Δ (%)
Track and Light Civil Works	355.0	314.3	13.0%
Energy, Signalling & Telecom	87.3	57.8	51.1%
Heavy Civil Works	52.7	21.6	144.2%
Rail Grinding & Diagnostics	15.2	2 0	n.a.
Railway Materials	41.7	36.1	15.5%
Railway Machines	12.6	10.4	21.1%
Total	564.6	440.1	28.3%

62.9%	Track & Light Civil Works (71.4% in 2021)
15.5%	Energy, Sign. & Telecom (13.1% in 2021)
9.3%	Heavy Civil Works (4.9% in 2021)
2.7%	Rail Grinding & Diagnostics (0% in 20212 )
7.4%	Railway Materials (8.2% in 2021)
2.2%	Railway Machines (2.4% in 2021)

1. Net of € 8.5 mln already recorded in 2021

2. In 2021 Rail Grinding & Diagnostics activities were included in Track & Light Civil Works

Focus on Business Units (1/4)

Track & Light Civil Works

2022 Revenues at € 355.0 Mln, up 13.0% YoY mainly due to:

• Activities within the new 3-year framework agreements with RFI
• Light civil works and other maintenance and renewal contracts in Italy
• Consolidation of Bahnbau Group
• 2023 activities will benefit from ramping up of US contracts on the back of the significant order backlog in the country, consolidation of Francesco Ventura Costruzioni Ferroviarie, and first activities on contracts in Romania expected towards year-end

Focus on Business Units (2/4)

Energy, Signalling & Telecommunication

• 2022 Revenues at € 87.3 Mln, up 51.1% YoY mainly due to:
• Activities within the new 3-year framework agreements with RFI
• Consolidation of the railway business unit acquired by PSC Group
• Growing contribution from Germany and from the new contracts acquired in 2021
• Signalling activities increasing their weight in the business, now at approx. 9% of the total
• 2023 will benefit from the full contribution of the new business unit

Focus on Business Units (3/4)

Heavy Civil Works

• 2022 Revenues at € 52.7 Mln, up 144.2% YoY mainly due to the contribution from the Verona-Padua HS line contract
• 2023 activities will be almost entirely focused on execution of the Verona-Padua contract and on activities in Germany

Rail Grinding & Diagnostics

• 2022 Revenues at € 15.2 Mln
• First international contracts in Germany and the US
• New Vulcano Heavy delivered in March 2023 and already on the field
• 2023 will be focused on increasing activities in Italy and executing foreign contracts, also with business development purposes

Focus on Business Units (4/4)

Railway Materials

• 2022 Revenues at € 41 . 7 Mln , up 15 . 5 % YoY with > 490 ,000 sleepers
• First production of >250 new FAST systems slabs, successfully installed by Track & Light Civil Works BU

• 2023 sleepers production expected broadly in line with 2022 while FAST production expected to ramp up . New multi product production line to be completed in 2 H

• 2022 Revenues at € 12 . 6 Mln , up 21 . 1 % YoY mainly due to the recovery of the activities in the US

• On top of the growing support to the Group, 2023 production will be focused on executing a contract for a foreign customer and additional activities in the US . Activities for the retrofit of the new building production plant bought in 2022 to continue during the year

Revenues by Geography

€ Mln

• Domestic revenues materially growing 38.2% (33.3% organic)
• Recovery in North America
• Slow-down in Middle East with lower production in Abu Dhabi
• North Africa higher YoY mainly due to a strong 4Q in Egypt

	2022	2021	Δ (%)
Italy	447.7	324.0	38.2%
Europe [Excluding Italy]	48.2	39.4	22.5%
North America	48.7	43.4	12.3%
Middle East	14.4	28.9	(50.1%)
North Africa	5.6	4.5	22.8%
Total	564.6	440.1	28.3%

79.3%	Italy (73.6% in 2021)
8.5%	Europe (excl. Italy) (8.9% in 2021)
8.6%	North America (9.8% in 2021)
2.6%	Middle East (6.6% in 2021)
1.0%	North Africa (1.0% in 2021)

Economic and Financial KPI

€ Mln

	2022	2021	Δ (%)
Revenues	564.6	440.1	28.3%
EBITDA	114.0	97.3	17.1%
EBITDA Margin	20.2%	22.1%	-
D&A	(36.0)	(29.1)	23.4%
EBIT	78.0	68.2	14.4%
EBIT Margin	13.8%	15.5%	-
Adjusted Net Financial Income (Expenses)*	(1.7)	1.9	n.a.
Adjusted EBT	76.3	70.1	8.8%
Adjusted Income Taxes**	(19.8)	(17.8)	10.8%
Adjusted Net Profit	56.5	52.2	8.2%

* Fair value change of warrant and financial investments	(8.9)	(9.7)	(8.6%)
** DTA reversal related to revaluations and non-recurring tax expenses	(2.0)	(3.1)	(38.0%)
Net Profit	45.6	39.3	16.0%

Adjusted Net Financial Position¹ 26.0 114.5 n.a.

• EBITDA Margin kept flat vs 9M 2022 confirming resilience in the current context of higher production costs although down 2.1 p.p. vs. 2021
• Higher D&A on the back of higher Capex made both in 2021 and 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
• Tax rate at 25.9% (see dedicated slide)
• Adjusted NFP at € 26.0 Mln (Net Cash) include the approx. € 25 mln paid to the PSC Group for the acquisition of the railway business unit, dividend paid for € 28.5 mln and the overall € 70 mln for the acquisition of Francesco Ventura Costruzioni Ferroviarie

Focus on Tax

FY 2022 final tax impact of € 21.72 Mln

• Effective tax rate without DTA on Capex effect (Base tax fee / Adjusted EBT) and tax effect related to fair value on financial investments and warrants, not recurring tax items is equal to 25.9% (25.5% in FY 2021)

• Capex Fiscal Impact 2022 at € 5.7 Mln (€ 5,62 Mln in 2021), in line with expectations. 2022-2028 figures do not include Capex from 2023 onwards

• Calculated on Capex until 31.12.22. The figure include the corporate tax benefit effect only. The effective benefit in higher considering the possibility to use tax credits arising from Capex to settle tax payments.

^1. € 3.2 Mln reversal deferred tax asset (FY 2020 revaluation of strategic CAPEX)

Adjusted NFP at 31 December 2022

Focus on Capex

€ Mln

• FY 2022 Capex at € 47.9 Mln, in line with expectations although with a different mix between Ordinary and Business Upgrade due to the slight postponement of one investment on the latter
• 2023 Capex expected materially higher reaching the peak at € 64.6 mln (+35%)
• Ordinary business flat confirming historical trend
• Business Upgrade mainly focused on new machines for Track & Light Civil Works and Rail Grinding & Diagnostics (€ 18 mln)
• Approx. € 10 mln for the development of new production plants for Railway Machines and Railway Materials

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

Backlog

€ Mln

• Backlog¹ further up at record € 1.7 Bn, of which € 1,255 mln (73.8%) from Italian market and € 445 mln (26.2%) from foreign markets
• Compared to 9M2022, further increase of the international component due to the contracts signed in Romania
• Track & Light and Civil Works and Energy Signalling & Telecommunication confirmed as the core Business Units, with 87.9% of the total backlog
• Book-to-bill ratio at 1.89x, with approx. € 300 mln coming from acquisitions
• Organic book-to-bill at 1.35x with >€ 750 mln new contracts acquired in 2022

Business Unit		Amount	%
Track and Light Civil Works		1,209,919	71.1%
	of which Foreign	431,560	25.4%
Energy, Signalling & Telecom		286,142	16.8%
	of which Foreign	542	0.0%
Railway Materials		53,677	3.2%
Heavy Civil Works		136,961	8.1%
	of which Foreign	9,408	0.6%
Railway Machines		14,500	0.9%
	of which Foreign	4,441	0.3%
Total		1,701,200	100.0%
	Italy	1,255,249	73.8%
			16

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

Business priorities for 2023

17

2023 Outlook

• Business volumes expected to growth by around 20% YoY (~ 10% organic), mainly driven by:
• Consolidation within Track & Light Civil Works BU of the recently acquired Francesco Ventura Costruzioni Ferroviarie as well as 4-month contribution of business unit acquired from PSC
• Further growth of the core business in Italy, with execution of the track works and energy Framework Agreements with RFI and of traditional and urban maintenance and renewal contracts for other customers
• Construction activities on the Verona-Padua High Speed line going at regime
• Ramp up of the activities on the ERTMS contract in Italy
• Boost of US activities on the back of the execution of new contracts signed in 2022
• First activities in Romania under the upgrade and modernization contracts signed in 2022
• In the current scenario with inflationary pression remaining fairly high and with the need to focus on the integration of Francesco Ventura Costruzioni Ferroviarie, EBITDA margin is expected to remain broadly in line with 2022, still supported by the effect on governmental measures
• Capex expected at € 65 mln further up compared to 2022 to sustain organic growth

Q&A

Appendix

Group Structure

Active in the railway sector for more than 70 years

ESG Performance 2022

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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