Tesmec — Investor Presentation 2019

Mar 5, 2019

• Stringing
• Energy Automation
• Railway
• Trencher

Integrated Solutions Provider

2018 Results Presentation

Corporate Strategy >

• 2018 Highlights and 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 >

• 2018 Highlights and Results >
• 2019 Outlook >

DIGITAL INTERCONNECTED EQUIPMENT

Job sites remote management thanks to interconnected equipment

Push on high tech sensitive markets

POWERLINES MAINTENANCE: ADVANCED WORKING METHODOLOGIES

The most innovative stringing project in China: helicopter stringing operations 500kV line on top of the two highest transmission towers in the world, 380m higher than Tour Eiffel

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

INTERNATIONAL COLLABORATIONS

Conductors manufacturer Helicopter service provider

National Grids

CERTIFICATION OF NEW DEVELOPMENTS

Speed up of sales on local & international markets

SMT IN RUSSIA: ramp up of mass production & field

Smart Metering solution for Russian MV Grids: Focus on products awareness through trainings for regional technical teams of installation and heavy marketing & sales plan

FROM A START UP TO A MAJOR DEPLOYMENT

Performance improvement through customized solutions both on sensors and protections

Push on high quality products to provide and enhance grid reliability and stability

First deployments with local TSO of HV solutions both on telecommunication and telecontrol application

2018 Trencher business highlights

INTEGRATED SOLUTIONS FOR TUNNELING APPLICATIONS

Remote dust control system combined to trencher: HSEQ advantages to project and sensitive receivers

✓ Successful solution in SYDNEY WEST CONNEX E NORTH CONNEX project

New integrated approach in the renewables energies field: complete value chain solution for underground cable laying

• ✓ small footprint
• ✓ high efficiency

Huge business opportunities in the 5G sector: business model as service provider and proposal of the innovative "clean & fast" methodology

CONTINUOUS IMPROVEMENT IN DIGITAL SYSTEMS

Complete range of machines equipped with the latest digital technologies to allow:

• ✓ higher reliability
• ✓ easier management
• ✓ maintenance costs reduction

2018 Railway business highlights

BRAND NEW PLANT

High efficiency manufacturing plant in Monopoli (Italy) equipped with the most advanced devices for quality assurance and tests to grant the full product reliability

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

	Industry 4.0 plan	Puglia Project
xxx Research & Development	> Tax savings on R&D > Patent box	> Design of innovative railcars with electrical transmission and
	> Training	diagnostic systems

GROUP (€ mln)	2018	2017	Delta %
REVENUES	194,6	175,6	10,9% (1)
EBITDA adj (2)	21,0	20,7	1,1%
% on Revenues	10,8%	11,8%
EBITDA (3)	18,9	20,7	-8,8%
% on Revenues	9,7%	11,8%
EBIT	3,7	6,1	-38,9%
% on Revenues	1,9%	3,5%
Differences in Exchange	0,2	(4,7)	104,5%
% on Revenues	0,1%	-2,7%
PROFIT (LOSS) BEFORE TAX	0,3	(1,5)	120,2%
% on Revenues	0,2%	-0,9%
NET INCOME/(LOSS)	0,04	(1,4)	103,1%
% on Revenues	0,0%	-0,8%
GROUP (€ mln)	2018	2017	Delta %
NFP (4)	77,7	85,2	8,8%

• (1) + 11,8% at constant currencies (2018 equal to Euro 196,3 million)
• (2) The EBITDA adj includes the insurance reimbursement and the offset of the reorganization costs.
• (3) Without the Australian extra jobsite costs and the non-recurring costs, the EBITDA would have been around 25,0 M€, 12,8% on revenues
• (4) Improvement due to the net working capital performance despite increase in capex

ENERGY	2018	2017	Delta %
Revenues	41,7	52,1	-19,8%
EBITDA adj	5,0	8,0	-37,5%
% on Revenues	12,0%	15,4%
EBITDA	4,8	8,0	-39,9%
% on Revenues	11,5%	15,4%

• Market volatility

• Technology breakthrough

• New products launch

TRENCHERS	2018	2017	Delta %
Revenues	125,5	106	18,3%
EBITDA adj	11,8	10,3	13,7%
% on Revenues	9,3%	9,7%
EBITDA	10,0	10,3	-3,1%
% on Revenues	8,0%	9,7%

Without the Australian extra jobsite costs, the EBITDA would have been around 15,7 M€, 12,5% on revenues

• Marais under performing

• US market booming

RAILWAY	2018	2017	Delta %
Revenues	27,4	17,4	57,2%
EBITDA adj.	4,2	2,4	74,5%
% on Revenues	15,5%	13,9%
EBITDA	4,1	2,4	69,8%
% on Revenues	15,0%	13,9%

• RFI tender execution

• TSO contract execution

• First 2 diagnostic vehicles

2018 FY versus 9M

Euro/mln	9M - YTD			Q4			Full year
	2018	2017	Var.	2018	2017	Var.	2018	2017	Var.
REVENUES	140,5	132,1	6,3%	54,1	43,5	24,4%	194,6	175,6	10,9%
EBITDA*	12,2	13,6	-9,9%	6,7*	7,1	-5,6%	18,9**	20,7	-8,8%
EBITDA %	8,7%	10,3%		12,4%*	16,3%		9,7%**	11,8%
EBIT	1,4	3,1	-53,6%	2,3	3,0	-23,3%	3,7	6,1	-38,9%

* without the non-recurring costs, the Q4 EBITDA would have been around 8,7 M€, 16,1% on revenues

** without the Australian extra jobsite costs and the non recurring costs , the FY EBITDA would have been around 25,0 M€, 12,8% on revenues

FY Differences in Exchange

GROUP (Euro mln)	2018	2017	2016
Differences in Exchange	0,2	(4,7)	1,7
of which:
Realised	(0,2)	(1,6)	0,2
Unrealised	0,4	(3,1)	1,5
Differences in Exchange for currency:
USD	0,8	(3,0)	0,7
ZAR	(0,5)	(0,2)	0,6
IDR	-	(0,6)	0,0
OTHER	(0,1)	(0,9)	0,4
Total	0,2	(4,7)	1,7

EBITDA FY 2018

€ mln

* without the Australian extra jobsite costs and the non recurring costs , the FY EBITDA would have been around 25,0 M€.

The EBITDA is impacted by the excellent results of the Railway segment, the extra-costs et non-recurring costs in the Trencher segment and the low volumes in the Energy Segment

2018

Financial Information (€ mln)	2018	2017
Net Working Capital	48,9	60,8
Non Current assets	67,3	68,4
Other Long Term assets/liabilities	4,8	0,9
Net Invested Capital	121,0	130,1
Net Financial Indebtness	77,7	85,2
Equity *	43,3	44,9

• • 2,2 ml Euro change in consolidation area (acquisition 13,21% Marais Technologies for C2D)
• • 1,1 ml Euro translation reserve
• • 0,5 ml Euro First Time Adoption IFRS 9

2017 Working capital's positive impact in Net Investing Capital 2018

OPERATING NET FINANCIAL POSITION

OPERATING NET FINANCIAL POSITION

• Corporate Strategy >
• 2018 Highlights and Results >
• 2019 Outlook >

2019 outlook

MACRO MARKET TRENDS xxx	+ New world technology Telecom – 5G Energy transition Mines – new methodology		- Economy is slowing → China – USA commercial → Middle East, Iran embargo
BUSINESS DRIVERS	ENERGY TRENCHERS	> New products launching > Important development on digital grids with cyber-security needs > Integrated solutions between automation and stringing → > New solutions for 5G installation Clean & Fast methodology
	RAILWAY	> Mining: development of special tailor made solutions (gold, bauxite, coal…) > Partnership for renewables solutions (e.g. Nexans) → > Diagnostic market developments new hi-tech solutions > Striniging – 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)	2018	2017	Delta vs 2017	Delta %
Net Revenues	194,6	175,6	19,1	10,9%
Raw materials costs (-)	(89,1)	(78,3)	(10,8)	13,7%
Cost for services (-)	(32,6)	(30,9)	(1,7)	5,6%
Personnel Costs (-)	(50,5)	(46,2)	(4,3)	9,2%
Other operating revenues/costs (+/-)	(11,3)	(5,3)	(6,0)	112,9%
Portion of gain/(losses) from equity investments evaluated using the equity method	0,2	0,2	(0,1)	-32,5%
Capitalized R&D expenses	7,6	5,7	1,9	33,9%
Total operating costs	(175,7)	(154,8)	(20,9)	13,5%
% on Net Revenues	(90%)	(88%)
EBITDA	18,9	20,7	(1,8)	-8,8%
% on Net Revenues	10%	12%
Depreciation, amortization (-)	(15,2)	(14,6)	(0,6)	4,2%
EBIT	3,7	6,1	(2,4)	-39,8%
% on Net Revenues	2%	3%
Net Financial Income/Expenses (+/-)	(3,4)	(7,7)	4,2	-55,1%
Taxes (-)	(0,3)	0,1	(0,4)	-362,0%
Minorities	-	-	-
Group Net Income (Loss)	(0,0)	(1,4)	1,4	-98,4%
% on Net Revenues	0%	-1%

Balance Sheet (€ mln)	2018	2017
Inventory	73,6	69,9
Accounts receivable	52,6	39,9
Accounts payable (-)	(54,4)	(39,5)
Op. working capital	71,8	70,3
Other current assets (liabilities)	(22,9)	(9,5)
Net working capital	48,9	60,8
Tangible assets	45,3	46,1
Intangible assets	18,0	18,3
Financial assets	4,0	4,0
Fixed assets	67,3	68,4
Net long term liabilities	4,8	0,9
Net invested capital	121,0	130,1
Cash & near cash items (-)	(42,8)	(21,5)
Short term financial assets (-)	(10,4)	(12,5)
Short term borrowing	80,1	79,2
Medium-long term borrowing	50,8	40,0
Net financial position	77,7	85,2
Equity	43,3	44,9
Funds	121,0	130,1

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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