Tesmec Group Results Analyst Presentation, 14 March 2013 Corporate
Agenda Business update A.Caccia Dominioni, CEO & Paolo Mosconi, GM Economics Results A.Bramani, CFO - Financial Results A.Bramani, CFO Outlook 2013-2015 A.Caccia Dominioni, CEO Appendix 2/22
Business overview MISSION: to operate in strategic markets for the growth and the modernization of every country in the world From IPO.. To.. Overhead & Underground Power Lines Civil Infrastructure Urban Construction Overhead & Underground Power Lines Grids efficiency Railway Lines Civil Infrastructure Trenching Services Urban Construction Transmission & Distribution Networks Pipelines Telecom Bulk Excavation Road Jobs Construction Utilities Transmission & Distribution Networks Transmission & Distribution Networks Railway Electrification & Maintenance Pipelines Telecom Bulk Excavation Special Contracting Road Jobs Construction Utilities STRINGING EQUIPMENT TRENCHERS MULTIPURPOSE MACHINES STRINGING EQUIPMENT INTEGRATED SYSTEMS RAILWAY EQUIPMENT TRENCHERS TRENCHERS MULTIPURPOSE MACHINES CROSS SELLING: new opportunities 3/22
Key Facts January January Ordinary Shareholders Meeting of Tesmec S.p.A. approved the purchase plan of treasury shares and appointed a new independent director. Acquisition of 40% stake of Bertel company in order to enlarge Tesmec offering in the High Voltage grid management March Signature of rental contract with AMC2 in order to acquire technical and technological expertise to enlarge Tesmec offering in Railway Electrification sector (from stringing to maintenance and special applications) July September Start up of photovoltaic system installed on the roof of the Grassobbio factory to cover about one-third of plant electricity consumption. Tesmec USA subsidiary - thanks to the development of an innovative system for the electrification and maintenance of the Production Wire Train - won a contract related to the supply of two railway wagons with the US National Railroad Passenger Corporation ( AMTRAK ), group active in the United States in the segment of railway suburban transport. The value of the work contract amounts to USD 7.2 million for 2013 with the possibility of annual renewal for another five years. Image source http://www.ecologiae.com/edison-edecostream-italy-insieme-per-ilfotovoltaico/500/ 4/22
Tesmec Group Strategy LEADERSHIP Focus on QUALITY to get the PREMIUM Sector of the market 5/22
Innovation: Research & Development STRINGING Design of special machines for high difficult projects GRIDS EFFICIENCY Advanced systems for predictive maintenance on power lines RAILWAY New vehicles for maintenance & diagnostic operations TRENCHERS New electronics for remote control and maintenance Collaboration with universities: > 5%* OF TOTAL REVENUES INVESTED EVERY YEAR Pisa Beijing Bergamo IN INTERNAL R&D *AVERAGE AMOUNT Milano 6/22
Operating Companies Group Structure at December 31, NEW COMPANY CREATED/PURCHASED IN Tesmec S.p.A. Existing Company at 1.1. Tesmec USA (75%)* Tesmec Rus (100%) Tesmec S.A. (100%) Tesmec Service (100%) I-Light and AMC2 Tesmec Balkani (100%) Fully Consolidated Effect on EBITDA and Pre-Tax Profit Tesmec Peninsula (49%) Condux Tesmec (50%) Equity Method Bertel (40%) East Trenchers (24%) Locavert (39%) Equity Method Effect on Pre-Tax Profit * The remaining 25% is held by Simest S.p.A. Since Tesmec has an obligation to buy it back from Simest S.p.A., from an accounting point of view the participation of the Parent Company in Tesmec S.p.A. is consolidated on a 100% basis. 7/22
Performance of foreign subsidiaries Tesmec RUS (100%) JV Condux-Tesmec (50%) Revenue 10.8 million (+112% vs PY) Revenue growth confirms success of the Group's strategy in North America Market Revenue 1.3 million Tesmec Rus now in place with financial performance in line with expectations; Tesmec USA (100%) Revenue 20.5 million (+61% vs PY) Performing better than previous year both in volumes and margins with a improvement contribution at Group Level JV Tesmec Peninsula (49%) Revenue 13.5 million (+864% vs PY) Decrease in existing stock with sales to third parties. Tesmec SA (100%) Revenue 1.4 million Good start up of the activities with rental contract already trasformed in sale in 8/22
Integration: Key Partnership STRATEGIC JV TECHNOLOGICAL AGREEMENT ACQUISITIONS COLLABORATION WITH ACADEMIC WORLD PARTNERSHIP WITH KEY PLAYERS 9/22
Economics Results INCOME STATEMENT (Euro Mln) 9M 4Q FY FY 2011 Delta % vs 2011 Revenues 80,8 39 119,8 111,8 +7% EBITDA % On Revenues 16,4 20% 7,9 20% 24,3 20% 19 17% +28% EBIT % On Revenues 11,7 14% 5,9 15% 17,6 15% 13,2 12% +33% NET INCOME % On Revenues 5,2 6% 2,9 7% 8,1 7% 6,6 6% +23% STRINGING STRINGING 2011 TRENCHER TRENCHER 2011 Revenues % Increase vs LY 68,9 +5,6% 65,3-50,9 +9,5% 46,5 EBITDA % on Revenues 14,4 21% 14,9 23% 9,9 19% 4,1 9% 10/22
Revenues: international scale and exposure to growing economies 2011 6% 13% 4% 6% 24% 22% 21% 5% 31% 24% 24% 20% Italy Europe Middle East BRICs and Oceania Africa North-Central America 11/18
2010- Revenues Evolution Mln 120 105 112 120 REVENUE 80 CAGR ( 10-12) 7% 40 0 2010 2011 Last quarter 9M STRINGING CAGR ( 10-12) 3% TRENCHER CAGR ( 10-12) 13% 69 51 2011 65 2011 47 2010 2010 65 40 Mln 0 50 100 Mln 0 20 40 60 12/22
2010- EBITDA Evolution Mln 30 20 18* 19 24 EBITDA CAGR ( 10-12) 15% 10 0 2010 2011 Last quarter 9M STRINGING CAGR ( 10-12) 6% 14 TRENCHER CAGR ( 10-12) 10 31% 2011 15 2011 4 2010 13 2010 6 0 10 20 Mln Mln * EBITDA affected by 3,3 IPO non recurring costs -> EBITDA Recurring Euro 18.4 Mln 0 5 10 15 13/22
NET PROFIT 12 (2,3) 8 5,3 (0,4) (0,2) (0,9) 4 6,6 8,1 0 Net Income 2011 EBITDA Forex Financial Charges Taxes Depr. & Amort. Net Income 2011 EBITDA increase partially offset by the exchange rate 14/22
Financial Results Financial Information (Euro Mln) 9M FY FY 2011 NWC 49,2 48,8 48,4 Non current assets 51,1 49,6 48,2 Other LT assets/(liabilities) 1,1 1 1,9 NET INVESTED CAPITAL 101,4 99,4 98,5 NFP 60,8 56,5 59,6 EQUITY 40,6 42,9 38,9 TOTAL SOURCES OF FINANCING 101,4 99,4 98,5 15/22
Working Capital Evolution Values in Mln FY FY 2011 Days* Days* 2011 Trade Receivables 43,6 43,9 131 141 Inventories 44,8 42,1 135 136 Trade Payables (32,1) (26,5) 96 85 Other current assets/(liabilities) (7,5) (11,1) 23 35 NET WORKING CAPITAL 48,8 48,4 * Calculated on Revenues Working Capital Evolution 60 40 2,7 (0,3) (5,6) 3,6 NET WORKING CAPITAL REVENUES 41% 20 48,4 48,8 2011 0 FY2011 Net Working capital Inventories Trade Receivables Trade Payables Other current ass. / liab. Net Working capital NET WORKING CAPITAL REVENUES 43% 16/22
Net Financial Position Evolution 70 Operating Net Financial Position without figurative debt for Grassobbio premises 60 50 59,6 21,7 (IAS 17) 20,7 56,5 40 30 20 10 37,9 37,9 (20,7) 0,4 3,2 0,8 7,3 3,1 3,8 35,8 0 NFP Operating FY 2011 NFP FY 2011 OFCF NWC Dividend paid Inv. Ass. Comp. Other Int.exp. capex Net net Taxes Operating NFP Capex (IAS 17) NFP 2011 Generating good cash flow after paying a good dividend 17/22
Exchange exposure Revenues Operating Costs 12% 37% 63% Euro USD 88% Euro USD Trade Receivables Euro 11% Trade Payables 49% 50% Other Currency USD 89% Euro USD 1% 18/22
Order Book ORDER BOOK YEAR END 2011 mln 60 45 30 15 44,1 19,1 25,0 60,9 23,1 37,8 0 2011 Stringing Equipment Trenchers STRINGING EQUIPMENT TRENCHERS mln mln 100 60 81,7 80 68,9 40 60 50,9 54,9 40 25 37,8 20 19,1 23,1 20 0 Order book FY 2011 Revenues Order Intake Order book 0 Order book 2011 Revenues Order Intake Order book 19/22
Key Projects RAILWAY New technologies for RFI in Italy GRIDS EFFICIENCY Agreement with FSK in Russia TRENCHERS Shale Gas projects Americas RAILWAY High speed rail catenary Installation in China Europe & Africa Asia STRINGIN Strong Grid & High Voltage Grid RAILWAY Strategic Project with Amtrak SPECIALIST SERVICES Platform in MiddleEast TRENCHERS Development in Qatar&Saudi Arabia 20/22
Outlook 2013-2015 Revenue increase in all lines of business for the next 3 years: - Single digit in Stringing and Trencher; - Double digit in new business lines (Railway, Efficiency and Special Contracting). Financial: - No increase in Share Capital; - Good dividend pay-out ratio; - Capex in line with previous years. 21/22
Appendix A - Summary Profit & Loss statement Profit & Loss Account ( mln) 2011 Delta vs 2011 Delta % Net Revenues 119,8 111,8 8,0 7% Raw materials costs (-) (56,0) (55,6) (0,4) 1% Cost for services (-) (20,3) (20,9) 0,6-3% Personnel Costs (-) (20,3) (17,9) (2,4) 13% Other operating revenues/costs (+/-) (2,0) (1,6) (0,4) 25% Portion of gain/(losses) from equity investments evaluated using the equity method 0,2 (0,1) 0,3-300% Capitalized R&D expenses 2,9 3,3 (0,4) -12% Total operating costs (95,5) (92,8) (2,7) 3% % on Net Revenues (80%) (83%) EBITDA 24,3 19,0 5,3 28% % on Net Revenues 20% 17% Depreciation, amortization (-) (6,7) (5,7) (1,0) 18% EBIT 17,6 13,3 4,3 33% % on Net Revenues 15% 12% Net Financial Income/Expenses (+/-) (5,4) (2,5) (2,9) 116% Taxes (-) (4,1) (4,2) 0,1-2% Minorities - - - - Net Income (Loss) 8,1 6,6 1,5 23% % on Net Revenues 7% 6% 22/22
Appendix B - Summary Balance Sheet Balance Sheet ( mln) 2011 Inventory 44,8 42,1 Accounts receivable 43,6 43,9 Accounts payable (-) (32,1) (26,5) Op. working capital 56,3 59,5 Other current assets (liabilities) (7,5) (11,1) Net working capital 48,8 48,4 Tangible assets 39,8 38,9 Intangible assets 7,6 8,0 Financial assets 2,2 1,4 Fixed assets 49,6 48,3 Net long term liabilities 1,0 1,8 Net invested capital 99,4 98,5 Cash & near cash items (-) (17,1) (13,8) Short term financial assets (-) (5,2) (2,4) Short term borrow ing 29,6 25,4 Medium-long term borrow ing 49,3 50,4 Net financial position 56,5 59,6 Equity 42,9 38,9 Funds 99,4 98,5 23/22
The Manager responsible for preparing the company s financial reports, Andrea Bramani, 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. Grassobbio, March 14, 2013 The Manager responsible for preparing the company s financial reports Andrea Bramani TESMEC S.p.A - Headquarters via Zanica, 17/O - 24050 Grassobbio (BG) - Italy Tel. +39.035.423 2911 - Fax +39.035.4522444 Management and Administration Fax +39.035.4522445 Stringing Equipment Division - Fax +39.035.335664 Trencher Division www.tesmec.com - info@tesmec.it