Tesmec — Investor Presentation 2019

May 6, 2019

• Stringing
• Energy Automation
• Railway
• Trencher

Integrated Solutions Provider

2019.Q1 Results Presentation

Corporate Strategy >

• 2019.Q1 Results >
• 2019 Outlook >

VISION

To be a technological partner in a changing world >

VALUE PROPOSITION

To supply addedvalue integrated solutions for our customers > Innovation

MISSION

To operate in the market of infrastructure for the transport of energy, data and material (oil and derivatives, gas, water). >

STRATEGY

Internationalization Integration >

STRINGING

• Overhead power lines construction & maintenance >
• Advanced methodologies for powerlines improvement >
• Zero emissions underground cable laying >

• Catenary lines construction & maintenance >
• Diagnostics systems >
• Big Data integrated solutions for safe infrastructure >

PLATFORMS FOR DIAGNOSTIC & DATA MANAGEMENT

• Telecommunications solutions for HV Grids >
• Grid Management: protection and metering solutions >
• Advanced sensors for fault passage indication, protection and monitoring >

• > Telecom networks, FTTH & long distance, power cable installation
• > Oil & Gas, Water pipelines
• > Bulk excavation, Quarries & Surfaces mining

• Corporate Strategy >
• 2019.Q1 Results >
• 2019 Outlook >

KEY MESSAGES

▪ INTEGRATED solutions

Complete offer package combining internal and partner's solutions

▪ DIGITAL & CONNECTED systems

Fully connected machines – digital platforms for the highest SAFETY

▪ CLEAN & FAST working methodologies

Integrated systems & technological solutions for an EFFICIENT and SUSTAINABLE jobsite

Equipment on booth

TRS

• 1150RH «EVO» with 3D GPS and remote control for tool maintenance

• SC4P with kit as-built 3DGPS (w/RADIO)

• 60 cm new tool for Cleanfast

SE

• PE1250: electrical Underground puller
• PT1450: 4.0 Overhead puller-tensioner machine

• Design and development of a revolutionary machine for underground cable laying in urban area:
  • ✓ Zero emission
  • ✓ No oil
  • ✓ Silent
  • ✓ Equipped with the most advanced digital & connected systems

LAUNCH OF THE BRAND NEW FULL ELECTRIC MACHINE POWERLINES MAINTENANCE: ADVANCED WORKING METHODOLOGIES

• Focus on new methodology for reconductoring in order to create a more efficient jobsite with relevant time and costs savings
• Innovative methodologies for maintenance and diagnostic of powerline with reduction of outage of the HV networks during operations

PUSH ON HIGH QUALITY PRODUCTS TO PROVIDE AND ENHANCE GRID RELIABILITY AND STABILITY ACCELERATING INTERNATIONAL GROWTH

• ENEL MARKET:

• Homologation of new protection solutions
• Supply of MV smart devices to Italy and South America

• ITALIAN MARKET:

• Start up of new market both for primary and secondary substation Automation

• RUSSIA:
  • Market Consolidation through product awareness
• OTHER HV MARKETS:
  • Awarded new TLC tenders in North Africa
  • New opportunities for markets with supplies in 2H

RELEVANT OPPORTUNITIES IN GROWING BUSINESS SECTORS – 5G

• Business model as service provider and proposal of the innovative "clean & fast" methodology
• Complete 5G & FTTx value chain proposal from utilities detection to surface finishing and home connection:
  • ✓ Clean and Fast solutions
  • ✓ Product development according to Country-based project requirements
  • ✓ Digital and connected systems

FOCUS ON DIGITAL AND SUSTAINABLE WORKING PROCESSES

• RH as a competitive surface mining smart solution:
  • ✓ High productivity and high precision
  • ✓ Digital and electronic controls for the highest safety
  • ✓ EVO series for hard rock digging and best worksite efficiency

METHODOLOGY FOR SAFE & FAST CATENARY MAINTENANCE OPERATIONS

• Approved solution (convoy of 4 vehicles with remote control) for replacement of the contact wires – RFI Italy
• Technological solutions for refurbishment of the line C of RER network - RC² consortium France

SOLUTIONS TO ASSURE RAILWAY INFRASTRUCTURES RELIABILITY

• Specialized vehicles equipped with diagnostic devices and digital platform to measure and to manage big amount of data in real time
• Diagnostic systems to grant safety of the railway infrastructures

GROUP (€ mln)	2019.Q1	2018.Q1	Delta %
REVENUES	49,8	46,7	6,6% (1)
EBITDA ante IFRS 16 (2)	4,9	6,1	-19,3%
% on Revenues	9,8%	13,0%
EBITDA post IFRS 16 (3)	5,7	6,1	-5,5%
% on Revenues	11,5%	13,0%
EBIT	1,5	2,8	-44,1%
% on Revenues	3,1%	5,9%
Differences in Exchange (4)	0,7	(0,7)	n/a
% on Revenues	1,4%	-1,5%
PROFIT (LOSS) BEFORE TAX	1,0	1,3	-21,1%
% on Revenues	2,1%	2,8%
NET INCOME/(LOSS)	1,0	1,1	-11,5%
% on Revenues	2,0%	2,4%
GROUP (€ mln)	2019.Q1	2018.Q1	Delta %
NFP ante IFRS 16	92,6	98,7	6,2%
NFP post IFRS 16 (3)	112,5	98,7

(1) + 4,5% at constant currencies

• (2) The EBITDA has not yet impacted by the full effectiveness of the positive management actions rolled out from September of the last year
• (3) Starting from the 1 st January 2019, the new IFRS 16 has been introduced. It impacts:
  • EBITDA +0,8 M€
  • Depreciation -0,7 M€
  • Net Results -0,1 M€
  • Intangible assets + 19,8 M€
  • NFP + 19,9 M€
• (4) The positive exchange differences are positive due to the favorable effects FX

ENERGY	2019.Q1	2018.Q1	Delta %
Revenues	10,3	9,2	11,8%
EBITDA ante IFRS16	1,0	1,2	-17,4%
% on Revenues	9,8%	13,3%
EBITDA post IFRS 16	1,2	1,2	1,5%
% on Revenues	12,1%	13,3%

• > Energy Automation Growth
• > European Market Driven

er
1

TRENCHERS	2019.Q1	2018.Q1	Delta %
Revenues	31,0	33,4	-7,2%
EBITDA ante IFRS 16	2,6	4,2	-38,0%
% on Revenues	8,4%	12,6%
EBITDA post IFRS 16	3,1	4,2	-26,4%
% on Revenues	10,0%	12,6%

• > Seasonality of renting/project activities
• > Marais Profitability Turnaround still on going
• > USA Market Booming

RAILWAY	2019.Q12018.Q1		Delta %
Revenues	8,5	4,1	106,6%
EBITDA ante IFRS 16	1,3	0,7	96,3%
% on Revenues	15,1%	15,9%
EBITDA post IFRS 16	1,4	0,7	114,4%
% on Revenues	16,5%	15,9%

• > RFI tender execution
• > TSO contract execution
• > Diagnostic vehicles

GROUP (Euro mln)	2019.Q1	2018.Q1
Differences in Exchange	0,7	(0,7)
of which:
Realised	0,1	(0,1)
Unrealised	0,6	(0,6)
Differences in Exchange for currency:
USD	0,2	(0,5)
AUD	0,1	(0,1)
OTHER	0,4	(0,1)
Total	0,7	(0,7)

2019.Q1 EBITDA

€ mln

* The impact of IFRS 16 is around 0,8 M€

Financial Information (€ mln)	2019.Q1	2018
Net Working Capital	64,4	48,9
Non Current assets	67,8	67,3
Right of use - IFRS 16	19,8	0,0
Other Long Term assets/liabilities	5,2	4,8
Net Invested Capital	157,2	121,0
Net Financial Indebtness	92,6	77,7
Lease liability - IFRS 16	19,9	0,0
Equity	44,7	43,3

6 th May 2019 17

€ 60,8 mln

2018 € 48,9 mln

Impact due to the increase of working in progress contracts for the railways business and trade receivables/stock related to TRS Business

2019.Q1 € 64,4 mln

Working Capital evolution

€ mln

48,9	2,6	7,2	4,7	3,0	(2,0)	64,4
2018 Net Working capital	Inventories	WIP	Trade Receivables	Trade Payables	Other current ass. / liab.	2019.Q1 Net Working capital
	Mln €		2019.Q1	2018	Days 2019.Q1	Days 2018
	Trade Receivables		57,3	52,6	96	97
	Inventories		65,2	62,6	110	136
	Work in progress contracts		18,2	11,0
	Trade Payables		(51,3)	(54,4)	-86	-101
	Other Current Assets/(Liabilities)		(24,9)	(22,9)	-42	-42
	Net Working Capital		64,4	48,9

OPERATING NET FINANCIAL POSITION

* Impacted of IFRS 16

OPERATING NET FINANCIAL POSITION

* From 1 st January 2019, the new IFRS 16 has been introduced, the impact is term of NFP is around 19,9 M€, otherwise the NFP would have been around 92,6 M€

• Corporate Strategy >
• 2019.Q1 Results >
• 2019 Outlook >

2019 outlook

MACRO MARKET TRENDS xxx	+ New world Telecom – Energy Mines – new	technology 5G transition methodology	- Economy is slowing → China – USA commercial → Middle East, Iran embargo
BUSINESS DRIVERS	> New products launching ENERGY > Important development on digital grids with cyber-security needs > Integrated solutions between automation and stringing → > New solutions for 5G installation Clean & Fast methodology TRENCHERS > Mining: development of special tailor made solutions (gold, bauxite, coal…) > Partnership for renewables solutions (e.g. Nexans)
	→ new hi-tech solutions New complete lines (e.g. Paris Regional Rail)
ECONOMICS & xxx FINANCIALS	1 2 EBITDA %: 3 NFP: 4 5	Sales: double digit growth improvement as result of cost improvement NFP/EBITDA ratio Expected BACKLOG: increase in line with revenues Back to dividends distribution policy	efficiency and a better mix of products (new solutions)

BACKLOG

Profit & Loss Account (Euro mln)	2019.Q1	2018.Q1	Delta vs 2018	Delta %
Net Revenues	49,8	46,7	3,1	6,6%
Raw materials costs (-)	(23,5)	(19,8)	(3,6)	18,2%
Cost for services (-)	(8,1)	(6,9)	(1,2)	16,6%
Personnel Costs (-)	(13,0)	(11,5)	(1,5)	12,9%
Other operating revenues/costs (+/-)	(1,2)	(3,9)	2,7	-69,2%
Portion of gain/(losses) from equity investments evaluated using the equity method	(0,0)	0,1	(0,1)	-109,1%
Capitalized R&D expenses	1,6	1,4	0,2	12,3%
Total operating costs	(44,1)	(40,7)	(3,4)	8,4%
% on Net Revenues	(88%)	(87%)
EBITDA	5,7	6,1	(0,3)	-5,5%
% on Net Revenues	12%	13%
Depreciation, amortization (-)	(4,2)	(3,3)	(0,9)	26,9%
EBIT	1,5	2,8	(1,2)	-44,1%
% on Net Revenues	3%	6%
Net Financial Income/Expenses (+/-)	(0,5)	(1,5)	0,9	-64,5%
Taxes (-)	(0,0)	(0,2)	0,1	-82,0%
Minorities	-	-	-
Group Net Income (Loss)	1,0	1,1	(0,1)	-11,5%
% on Net Revenues	2%	2%

Balance Sheet (€ mln)	2019.Q1	2018
Inventory	83,4	73,6
Accounts receivable	57,3	52,6
Accounts payable (-)	(51,3)	(54,4)
Op. working capital	89,3	71,8
Other current assets (liabilities)	(24,9)	(22,9)
Net working capital	64,4	48,9
Tangible assets	45,9	45,3
Intangible assets (1)	37,7	18,0
Financial assets	4,0	4,0
Fixed assets	87,6	67,3
Net long term liabilities	5,2	4,8
Net invested capital	157,2	121,0
Cash & near cash items (-)	(32,6)	(42,8)
Short term financial assets (-)	(9,3)	(10,4)
Short term borrowing	81,4	80,1
Medium-long term borrowing (1)	73,0	50,8
Net financial position	112,5	77,7
Equity	44,7	43,3
Funds	157,2	121,0

(1) Starting from the 1 st January 2019, the new IFRS 16 has been introduced, the impact for the 2019.Q1 is included in the Intangible Assets, as Right of Use, for 19,8 M€, and in the NFP, as Lease Liability, for 19,9 M€.

Disclaimer

The Manager responsible for preparing the company's financial reports, Gianluca Casiraghi, declares, pursuant to paragraph 2 of Article 154-bis of the Consolidated Law on Finance, that the accounting information contained in this presentation corresponds to the document results, books and accounting records.

Certain information included in this document is forward looking and is subject to important risks and uncertainties that could cause actual results to differ materially.

Any estimates or forward-looking statements contained in this document are referred to the current date and, therefore, any of the assumptions underlying this document or any of the circumstances or data mentioned in this document may change. Tesmec S.p.A. expressly disclaims and does not assume any liability in connection with any inaccuracies in any of these estimates or forward-looking statements or in connection with any use by any third party of such estimates or forwardlooking statements.

This document does not represent investment advice or a recommendation for the purchase or sale of financial products and/or of any kind of financial services. Finally, this document does not represent an investment solicitation in Italy, pursuant to Section 1, letter (t) of Legislative Decree no. 58 of February 24, 1998, or in any other country or state.

In addition to the standard financial reporting formats and indicators required under IFRS, this document contains a number of reclassified tables and alternative performance indicators. The purpose is to help users better evaluate the Group's economic and financial performance. However, these tables and indicators should not be treated as a substitute for the standard ones required by IFRS.

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