Maire Tecnimont S p A : announces its 9M 2020 Consolidated Financial Results

Press Release

No. 24 - 11.11.2020

MAIRE TECNIMONT ANNOUNCES ITS 9M 2020

CONSOLIDATED FINANCIAL RESULTS

• • Revenues (€1,870.0 million) and EBITDA (€112.5 million), up in the last quarter; stable margins (6%) vs. previous two quarters

• • Adjusted Net Financial Position in continuous improvement in the last two quarters

• • Backlog: €6.0 billion, of which about 80% in gas monetization and Energy Transition; new orders for €1.8 billion, of which about 85% in gas monetization and energy transition

• • Commercial Pipeline at €52.6 billion

• • Acceleration of the strategic development in Energy Transition: new agreements for technology partnerships as well as for projects in Italy and abroad; set up a new company, MyRechemical, confirming the Group's commitment to waste to chemical

Milan, 11 November 2020 - Maire Tecnimont S.p.A.'s Board of Directors today has reviewed and approved the Interim Financial Report as at 30 September 2020, which reports a Net Income of €31.6 million. The Nine-Month results are impacted by the effects of the Covid-19 pandemic in the main geographical areas where the Group operates. The comparison with the 9M 2019 results reported in the table below, therefore, is hardly indicative.

CONSOLIDATED HIGHLIGHTS

(in Euro millions)	9M 2020	9M 2019	Change %
Revenues	1,870.0	2,420.3	-22.7%
Contract Gross Profit (1)	219.5	279.9	-21.6%
Contract Gross Margin	11.7%	11.6%	+100bps
EBITDA	112.5	168.7	-33.3%
EBITDA Margin	6.0%	7.0%	-100bps
Pre-Tax Income	46.0	119.8	-61.6%
Tax Rate	31.3%	31.2%
Net Income (2)	31.6	82.5	-61.7%

(1) "Gross Contract Profit" is the industrial margin before the allocation of commercial, general and administrative costs and research and development expenses.

(2)If the temporary impact of the valuation of outstanding derivatives contracts were excluded from the net income, the net income for 9M 2020 would have been €39.4 million and €81.7 million for 9M 2019, with a delta of 51.8%.

(in Euro millions)	30.09.2020	31.12.2019	Change
Adjusted (Net Debt)/Net Cash*	(227.8)	78.9	(306.7)

* Net of €9.9 million at 30/9/20 (€59.4 million at 31/12/19) of Non-Recourse Debt related to the MyReplast acquisition (and the one related to the Alba-Bra hospital at 31/12/2019, deconsolidated at the end of June), and €15.9 million to be recovered in India at 30/9/20 (€16.6 million at 31/12/19), excluding trade receivables equivalent to financial credits for €223.6 million at 30/9/20 (€38.3 million at 31/12/19), and excluding the IFRS 16 impacts for €144.9 million at 30/9/20 (€150.1 million at 31/12/19).

ORDER INTAKE AND BACKLOG

(in Euro millions)	9M 2020	9M 2019	Change
Order Intake	1,806.0	1,589.6	216.4

(in Euro millions)	30.09.2020	31.12.2019	Change
Backlog	6,003.7	6,143.4*	(139.7)

* Not including Alba/Bra Hospital, deconsolidated in June 2020

FINANCIAL HIGHLIGHTS BY BUSINESS UNIT

(in Euro millions)

Hydrocarbons

Revenues

1,823.5

2,326.5

Contract Gross Profit EBITDA

217.5	11.9%	270.5	11.6%
113.6	6.2%	166.3	7.1%

Green Energy

Revenues

46.5

93.8

Contract Gross Profit EBITDA

2.0 (1.0)

4.4% n.m.

9.4 2.4

10.1% 2.6%

ORDER INTAKE BY BUSINESS UNIT

(in Euro millions)	9M 2020	9M 2019	Change
Hydrocarbons	1,795.7	1,473.4	322.3
Green Energy	10.3	116.2	(105.9)

BACKLOG BY BUSINESS UNIT

(in Euro millions)	30.09.2020 31.12.2019	Change
Hydrocarbons*	5,811.9	5,999.2	(187.3)
Green Energy	191.8	144.2**	47.6

*of which around €4,400 million refers to projects of gas monetization and Energy Transition as of 30.09.2020 ** Not including Alba/Bra Hospital, deconsolidated in June 2020

The changes reported refer to 9M 2020 versus 9M 2019, unless otherwise stated.

Consolidated Financial Results as at 30 September 2020

Results for the 9M period, as already noted, are impacted by the Covid-19 pandemic, which affected the main geographical areas where the group operates. The comparison with year-ago results, reported below, is therefore hardly indicative.

Maire Tecnimont Group Revenues were €1,870.0 million, down 22.7%. Volumes are impacted by the slowdown in certain geographies, especially since the second half of March, following the decisions taken by Governments in order to contain the Covid-19 pandemic. The Third Quarter of 2020, notwithstanding a scenario still characterized by strong elements of uncertainty due to the persistent effect of the pandemic, particularly in certain geographical areas, saw the resumption of operations on the main projects in the backlog, resulting in an increase in production volumes compared to the Second Quarter.

Furthermore, as already stated in the previous quarters, volumes are impacted by the non-linear progress of projects in the backlog, and their performance over time, depending upon the scheduling of the individual activities. Volumes also reflect both the final stage of some EPC projects awarded over the past years, not yet compensated by new acquisitions, and the type of contracts that were recently acquired, mainly Engineering, Procurement, Construction Management and Commissioning services, that, due to their nature, generate lower volumes.

Contract Gross Profit was €219.5 million and resulted in a Gross Contract Margin of 11.7%, slightly up from 11.6%.

G&A costs were €53.0 million, down 6.9%, as result of the implementation of the cost saving initiatives launched in response to the current situation, whose benefits will continue to mature also in the next months. Savings achieved in the first nine months this year have more than compensated the increased costs due to the strengthening of the NextChem's organization as well as in certain geographies.

EBITDA was €112.5 million with a margin of 6%, due to lower volumes, in line with previous quarter, but lower than 9M 2019 due to lower production volumes and a subsequent higher impact of fixed costs, despite the positive contribution from previously mentioned cost cutting measures.

Amortization, Depreciation, Write-downs and Provisions were €33.4 million, down 4.5%.

EBIT was €79.2 million, down 40.8%.

Net Financial Charges were €33.1 million, compared to €13.9 million. The result of the first nine months of 2020 is mainly due to a temporary negative net valuation of certain derivative contracts for €11.3 million vs. a positive value of €1.1 million, leading to a negative change of €12.4 million. This valuation was mainly negatively impacted both by an unfavorable exchange rate performance of the Russian Ruble and the US Dollar versus the Euro, also caused by the pandemic's impact on the FX markets, and by the price trend of some raw materials, which are linked to derivative edging.

Also impacting the 9M 2020 Results are financial charges related to the €365 million loan agreement which is 80% backed by SACE's "Garanzia Italia" (Italy Guarantee) and lower financial income due to lower cash and cash equivalents invested in the period.

Pre-tax Income was €46.0 million, down 61.6%. The tax provision was €14.4 million.

The effective tax rate was approximately 31.3%, substantially unchanged over the last quarters, considering the various jurisdictions where Group operations have been carried out.

Net Income was €31.6 million, down 61.7%, mainly due to lower volumes and a temporary negative net valuation of certain derivative contracts, as stated above.

Net Debt (net of the above-mentioned values in the footnote on page 2) at September 30, 2020 was €227.8 million, down compared to a Net Cash of €78.9 million at 31 December 2019, but up by €32.8 million in the Third Quarter.

The decrease in the First Quarter, already noted in the previous press releases, was followed by a constant improvement starting from the second quarter 2020, thanks to the advance payments of recently acquired projects, as well as the cash generation from projects in our portfolio, partially compensated by the mark-to-market valuation of the